As many income investors know, dividend investing can result in the guarantee of income or, in certain cases where the investor has a dividend reinvestment account, more shares. I personally prefer the latter, but that's just me. In the case of the two stocks featured, the dividend increases shouldn't be the only factors taken into account before establishing a position.
Lancaster Colony Corp. (LANC) announced a 5.6% or $0.02/share increase on November 19, to its current dividend of $0.36/share. It also announced a special dividend of $5.00/share to be paid on the same date of its regular dividend distribution, which is December 28th to shareholders of record as of December 10th. As a result of the increase, the company now yields 2.13% ($1.52) on an annual basis, which is then broken down and distributed to shareholders each quarter.
For potential investors of Lancaster Colony Corp., the dividend hike isn't the only catalyst long-term investors should consider. In fact, there are two ancillary catalysts potential investors need to examine before moving forward. The first catalyst to consider is the fact the stock has surpassed analysts' EPS estimates in each of the last two quarters by an average of 12.60%. The second of the two catalysts to consider could be the outlook the company has for FY13. According to Chairman and CEO John Gerlach, who noted the company's outlook back in August and reiterated a similar sentiment earlier this month:
"We anticipate that Specialty Foods operating income may initially benefit from modestly higher pricing and from overall commodity costs beginning the year somewhat below year ago levels. We also believe that the strength of our market positions, along with a solid and flexible balance sheet, leave us well positioned to support future growth."
MDU Resources Group, Inc. (MDU) announced a 3.0% or $0.005/share increase on November 15, to its current dividend of $0.1675/share. As a result of the increase, the company now yields 3.52% ($0.69) on an annual basis, which is then broken down and distributed to shareholders each quarter.
For potential investors of MDU Resources Group, the dividend hike isn't the only catalyst that should be considered long-term. In fact, there are two ancillary catalysts potential investors need to examine before moving forward. The first catalyst to consider is the fact the stock is trading at a 6.23% discount to its current 50-DMA and a 9.05% premium to its current 200-DMA. The second catalyst to consider isn't a single event, but rather concerns the company's outlook moving forward. According to the company's Chairman of the Board, Harry Pearce:
"Our diversified business strategy continues to demonstrate its value. Our exploration and production business is on track to achieve its increased oil production target, our utility business is experiencing good growth, our pipeline business is expanding its midstream presence, and our construction businesses are seeing encouraging signs of a market upswing."
For potential investors looking to establish a position in either Lancaster or MDU, I'd continue to pay very close attention to the overall state of the U.S. economy, as certain commodity prices could have an effect on the overall pricing structure at both companies. Based on the streak both companies have established in terms of consecutive dividend payouts, I'd look to initiate a small to medium sized position given their current yields of 2.13% and 3.52%, respectively.