Eight Dividend Increases

When companies decide to share a portion of their earnings with their shareholders, it is a sign of prudent fiscal discipline. Shareholders who are rewarded on a timely basis in the form of dividend payments are less likely to sell their holdings, even during a steep market correction. However, when companies decide to raise their distributions they exert strong confidence in their near-term performance. This dividend increase is a strong bullish signal especially if it comes after a long string of consecutive dividend increases.

Several companies announced that their boards of directors have approved dividend increases. The companies include:

Altria Group, Inc. (MO), which engages in the manufacture and sale of cigarettes and other tobacco products in the United States, increased its quarterly dividend by 6.3% to 34 cents per share. The stock currently yields 7.50%. Check my analysis of the stock.

MGE Energy, Inc. (MGEE), which engages in generating, purchasing, transmitting, and distributing electricity, increased its quarterly dividend by 8% to 14 cents per share. MGE Energy, Inc. is a dividend achiever, which has increased its quarterly dividend for 34 consecutive years. The stock currently yields 3.90%.

HCC Insurance Holdings, Inc. (HCC), which provides property and casualty, surety, group life, accident, and health insurance coverage, as well as related agency and reinsurance brokerage services to commercial customers and individuals., increased its quarterly dividend by 8% to 13.50 cents per share. HCC Insurance Holdings, Inc. is a dividend achiever, which has increased its quarterly dividend in each of the past thirteen years. The stock currently yields 1.90%.

Delta Natural Gas Company, Inc. (DGAS), which sells and distributes or transports natural gas to customers in central and southeastern Kentucky., increased its quarterly dividend by 1.6% to 32.50 cents per share. The company has raised dividends consistently since 2005. The stock currently yields 5.20%.

G&K Services, Inc. (GKSR), which provides branded identity apparel and facility services programs in North America., increased its quarterly dividend by 7% to 7.5 cents per share The stock currently yields only 1.30%.

Alliance Financial Corporation (ALNC), which which provides various banking products and services to commercial, retail, government, and investment management customers, increased its quarterly dividend by 7.7% to 28 cents per share. The stock currently yields 4.00%.

Guess?, Inc. (GES), which designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children., increased its quarterly dividend by 25% to 12.5 cents per share. The stock currently yields 1.40%.

ESSA Bancorp, Inc. (ESSA), which provides financial services to individuals, families, and businesses in Pennsylvania, increased its quarterly dividend by 25% to 5 cents per share. The stock currently yields only 1.20%.

Harris Corporation (HRS), which operates as a communications and information technology company that serves government and commercial markets worldwide, increased its quarterly dividend by 10% to 22 cents per share. The stock currently yields 1.90%.

In summary I view Altria's dividend increase as a bullish sign for the company stock. The company seems to be following its policy of consistent dividend increases that it used to follow before the spin-offs of Philip Morris International (PM) and Kraft Foods (KFT) I do however also own some Philip Morris International in order to benefit from international exposure to the tobacco sector.

Disclosure: Long PM and MO

Comments

[Richard Shaw:]

We agree with Dividend Growth Investor. Dividends are an important demonstration of management confidence, and historically have been a significant contribution to total return.

In a filter we did through 09/04/2009 ( www.qvmgroup.com/QVMre...), we found 309 companies that have increased their dividends for 4 quarters year-oer-year.

We found those companies by identifying 2,393 companies with market-cap of $500 million or more, and reducing that group to 1.342 that paid any dividends at all over the past 3 years, and then finally to those whose trailing 4 quarter payout (1Q, 2Q, 3Q, and 4Q) exceeded the YOY 4 quarters (5Q, 6Q, 7Q and 8 Q).

Some of those 309 did not maintain that strength throughout 1Q, 2Q, 3Q and 4Q, but did raise payout in the aggregate over 4 quarters.

When we ranked them by market-cap and then asked which had a higher payout for 1,2, 3 and 4 quarters YOY, and a trailing 12-month increase in "as reported" and continuing earnings per share, and a trailing 12-month increase in sales per share; these five were at the top of the list:

WMT, VZ, ABT, AZN, and CVS

There are certainly other factors to consider when making an investment commitment, but rising sales, rising earnings and rising dividends in a difficult economic environment are a very positive attributes.

Sep 08 05:23 PM

[bminfo247:]

How will GUESS and other manufacturers of apparel favourite with teens do with tighter inventories amidst the back to school season?
finance.yahoo.com/news...

Sep 11 10:34 AM