Five Stocks Currently Raising Dividends

Many years ago my grandmother made the statement, “Everyone I know is either dead, or dying.” I thought it was an odd statement since everyone I knew was either getting married or having kids. Your perspective depends on who you run with. Contrary to the perception from popular media, not all companies are cutting dividends, many are still raising them, and some are starting a new dividend program.

This week is no different, the dividend increases continue with several companies sharing the wealth with their shareholders through higher cash dividends:

Kaydon (KDN) designs, manufactures, and sells custom engineered products in North America, Europe, and Asia. Recently, the company increased its quarterly 5.9% to $0.18/share. The dividend is payable October 5, 2009 to shareholders of record as of the close of business on September 14, 2009. The current yield based on the new dividend is 2.22%.

American Water Works (AWK) provides water, wastewater and other water-related services to residential, commercial, and industrial customers in the United States and Canada. Last week, the company raised its quarterly cash dividend by 5% to $0.21/share. The dividend is payable on September 1, 2009 to all shareholders of record as of August 18, 2009. The current yield based on the new dividend is 4.20%.

Atrion (ATRI) designs, develops, manufactures, markets, sells and distributes various products and components, primarily for the medical and health care industry. Tuesday,the company boosted its quarterly cash dividend 20% to $0.36/share. The dividend is payable on September 30, 2009 to stockholders of record at the close of business on September 15, 2009. The current yield based on the new dividend is 1.10%.

Leggett & Platt (LEG) makes a broad line of bedding and furniture components and other home, office, and commercial furnishings, as well as diversified products for non-furnishings markets. Yesterday, the company raised its quarterly dividend 4% to $0.26/share. The dividend is payable October 15, 2009 to shareholders of record on September 15, 2009. The ex-dividend date is September 11. After seven straight quarters with its dividend froze at $0.25/share, this Dividend Aristocrat was two quarters away from being removed from the list. The current yield based on the new dividend is 5.90%.

Dover (DOV) manufactures a broad range of specialized industrial products and sophisticated manufacturing equipment. Thursday, the company increased it quarterly dividend 4% to $0.26. The dividend will be paid on September 15, 2009 to shareholders of record as of August 31, 2009. The ex-dividend date is August 27th. DOV is a Dividend Aristocrat that has increased its dividend for 54 consecutive years. The current yield based on the new dividend is 3.06%. [Analysis]

Finally, we celebrate the birth of a new dividend company as PetMed Express (PETS) declared its first ever dividend of $0.10/share on Monday. PETS markets prescription and nonprescription pet medications and other health products for dogs, cats, and horses directly to the consumer. The dividend is payable on August 31, 2009, to shareholders of record at the close of business on August 14, 2009, with an ex-dividend date of August 12th. The current yield based on the new dividend is 2.15%.

There are many companies that continue to consistently raise their dividends. For stocks with a long string of consecutive dividend increases, see this list.

Full Disclosure: No position in the aforementioned stock. See a list of all my income holdings here.

Comments

[john s. gordon:]

ref. your grandmother -
my dad used to say the hardest part of growing older was having to bury all your fishing buddies one by one.
> jack

Aug 08 09:03 AM

[CHARGER:]

Please remove (unsubscribe) the Charger Line as it interferes with PC opration

Aug 08 11:20 AM

[David Van K...:]

>>"Contrary to the perception from popular media, not all companies are cutting dividends, many are still raising them, and some are starting a new dividend program."<<

Keep emphasizing this point. Dividend investors who do their homework know it is true, but sometimes the message gets drowned out by the overall dividend statistics from S&P and elsewhere.

Aug 08 11:29 AM

[granger:]

I am a happy owner of PETS. It was one of my few non-dividend paying holdings. (TECH started, now PETS, I still have hopes for SCRL someday.)

Aug 08 08:25 PM

[granger:]

typo SRCL


On Aug 08 08:25 PM granger wrote:

> I am a happy owner of PETS. It was one of my few non-dividend paying
> holdings. (TECH started, now PETS, I still have hopes for SCRL someday.)

Aug 11 05:21 AM

[Pillpoppinp...:]

For many years, Kaydon has impressed me as an efficient operator with high margins and strong free cash flow. Gross margin consistently exceeds 40%. Growth has been reasonable over the past five years with revenue increasing 12% per year and cash flow 11%. Productivity has been strong, with EBITDA per employee increasing 9% per year over the past three years. The company is currently sitting on a cash hoard of more than $6 a share, net of debt that could enable it to make a significant accretive acquisition; it could also make the company an interesting acquisition target by a leveraged entity (97% of the shares are institutionally owned). Despite the accumulating net cash balance reaching $207 million at the end of March, Kaydon was made just one acquisition in 3.5 years, a $55 million purchase of Avon Bearings in late 2007, although it has repurchased $78 million of stock during the period.

The conditions underlying recent economic weakness, namely, tight credit, coupled with low energy prices, have slowed the growth in wind energy projects in 2009. Recent large additions to the nation’s natural gas reserves as a result of the advent of shale gas, threatens to reduce growth in wind energy demand, affecting investor sentiment near term. However, significant wind energy projects continue to be announced globally. (A sample list of projects is presented at the bottom of this analysis.) China could also present an opportunity. However, China appears to be largely a closed market to nondomestic manufacturers: When the Chinese government took bids in early 2009 for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. This is unfortunate for component manufacturers like Kaydon, because in 2009, China passed the U.S. as the world’s largest market for wind energy (nytimes.com/2009/07/1...

Expectations for Kaydon’s 2009 and 2010 earnings have declined materially. Management has taken several steps to adjust to the weak market, freezing executive salaries, eliminating salary increases across the board, closing or eliminating a number of benefit programs, significantly curtailing both temporary labor and overtime, and implementing targeted staff cuts at most locations.

KDN’s stock price is down from $59 last July to $30. At the current price, the shares trade at 9 times estimated 2009 EBITDA, which is expected to drop nearly 30% from 2008 on an expected 11% revenue decline. A multiple of nine on depressed earnings is attractive. Based on what I believe are conservative estimates in the five years following 2009, Kaydon will generate $10 a share in free cash flow. At the current stage of the economic cycle, I believe that the potential upside outweighs the downside risk.

My view is that KDN is a core position that may not appreciate in value for two or three quarters. I am reluctant to trade in and out because Kaydon could be an appealing acquisition target; even based on depressed 2009 expectations, an acquirer, assuming half of Kaydon’s SG&A expense could be eliminated in a takeover, could purchase KDN for six times EBITDA and pay off nearly 20% of the acquisition price with the cash on Kaydon’s balance sheet. In a different era, portfolio managers actually invested in stocks based on such company-specific analysis as opposed to speculating in entire industry segments using ETFs. Although that era may never return, private equity and strategic acquirers are unlikely to remain dormant forever.

A sample of recently announced projects; in the third quarter, the following wind energy projects have been announced:
Australia: (1) Roaring 40s is proceeding with the development of a 111MW wind project at Waterloo in South Australia. Vestas received an order for 37 units of the V90-3.0 MW wind turbine for a wind farm project in South Australia. The order comprises supply, installation, commissioning as well as a 10-year service agreement. Shipment of the turbines is scheduled for the 4Q09, with site delivery and installation in 2010
Canary Islands (1) Gas Natural SDG, Spain’s largest gas company, wins contracts to build 11 wind energy parks in the Canary Islands that will add 116.6 MW of capacity.
China: (1) Vestas received orders for 75 MW of turbines from a large Chinese independent power producer.
(2) China WindPower Group announced plans to develop 1,500 MW of wind turbines in Baicheng in province of Jilin; Baicheng plans to have wind capacity of 10 GW.
(3) China is now building six wind farms with a capacity of 10,000 to 20,000 megawatts apiece.
(4) Huaneng commissioned a 300MW wind farm in Fuxin in China’s Liaoning Province. The project, the second phase of a 500MW wind farm in Fuxin, will have 200 turbines installed, and will cost $454 MM.
(5) China Huadian Group announced plans to build a 100MW wind farm in Xiji County in the Ningxia Antonomous region. Intends to construct the $146 MM wind farm in two phases.
Cyprus: (1) Vestas wins order for 41 wind turbines with total capacity of 82 MW for Cyprus’ first wind park; turbine deliveries expected to begin in Q409 and commissioning to be completed in summer of 2010
Germany (1) German utility Enbw and project developer Altus have set up a joint venture to develop 150MW of German onshore wind projects. The 50-50 vehicle has the rights to develop six wind projects
(2) Vattenfall is planning to construct a 400MW offshore wind farm 70km off the North Sea island of Sylt, Germany. The project will cost around $1.5 bil. and will benefit from a feed-in-tariff of around EUR $0.22/kWh. Construction of the project is planned from 2011 onwards.
Hong Kong: (1) CLP and UK project developer Wind Prospect have secured approval for the environmental impact assessment report from the Hong Kong government for a 200MW offshore wind project in the territory. The next phase of the project is the installation of a wind mast at the proposed site for a feasibility study
Norway: (1) Enova allocated $170 MM for four wind projects across Norway, located in Fakken, Nygårdsfjellet, Hundhammerfjellet and Høg-Jæren, that will generate around 460GWh of power annually
Poland: (1) Five large offshore wind farms with output totaling almost 2000MW are being planned in the Polish waters of the Baltic Sea to come on stream in five years' time, report the country's media. The most ambitious projects are being prepared by Polska Grupa Energetyczna, with some 1000MW in the pipeline, at an estimated cost of some $4.6bil.
Scotland: (1) Statkraft AS, Europe's largest renewable energy generator, plans to invest more than $650 million building wind farms in Scotland; Statkraft is involved in seven onshore wind farm projects in the UK, including five in Scotland
(2) The Government of Scotland has granted approval to the 78MW Berry Burn wind farm. The Berry Burn plant, located near Forres, is developed by Catamount Energy and will comprise 29 turbines.
(3) The Government of Scotland has granted approvals to the 15MW extension of the Millennium project. The Millennium farm, developed by Millenium Wind Energy, currently has the capacity of 65MW, and 15MW will be added shortly.
(4) Npower Renewables, the UK subsidiary of German utility RWE, has been given the go ahead to develop a wind farm of up to 16MW in Aberdeenshire, Scotland.
Spain: (1) Suzlon agreed with EUFER to supply and install in 2010-2011 224.5 MW of 2.1 MW turbines in Spain and Portugal
Taiwan: (1) KfW IPEX Bank is providing a $85 MM loan for German wind farm developers VWind AG and WPD AG to develop the 43.7MW Guanyin project in Taiwan
U.K. (1) The U.K. government published its Low Carbon Industrial Strategy, which would invest up to $170 million to support the development of a U.K.-based offshore wind industry. The money is coming from the $573 million set aside in the 2009 budget. The U.K. is counting on offshore wind to meet a binding European Union target to source 15% of its energy needs from renewable sources by 2020. The British Wind Energy Assn. and the Confederation of British Industry said the government needs to take stronger measures to overcome local planning issues, which have stalled projects and vital grid infrastructure.
U.S.: (1) Finnish turbine manufacturer Winwind agreed to supply US-based Wild Brush Energy with $200 million of turbines towards a 120 MW project
(2) BP Plc started expanding its Fowler Ridge wind farm in Benton County,Indiana; project's second phase to have a capacity of 200 MW and is expected to be completed in 1Q10; BP will use 133 GE turbines
(3) Regulators in Texas have awarded start-up Baryonyx two offshore wind leases in the Gulf of Mexico for projects that could eventually each be as large as 1.3GW
(4) EnXco & Indianapolis Power & Light entered 20-year power purchase agreement for 201 MW wind facility to be built in Minnesota; enXco to develop, build and own the project which will feature 134 GW 1.5 MW turbines; project is expected to be operational by the end of 2010
(5) BP & Clipper to build first phase of Titan wind farm in South Dakota on expectation that an economic recovery will ease financing constraints; first installation of 25 MW stage planned for this year. Total project capacity targeted to be 5,050 MW to be built in stages over 10 years at total cost of $12-15B

Aug 13 09:05 PM