Dividend Boosts for 3 Big Names

Much has been written in the media about the “record numbers” of companies cutting or failing to raise their dividends. Even with a large number of companies not increasing their dividends this year, there is still an abundance of companies that have. For those companies that fail to increase their dividends, it is one less stock dividend investors have to track and analyze.

Below are three companies that recently increased their cash dividends:

Reynolds American (RAI) was formed as a result of the the mid-2004 merger of R.J. Reynolds and Brown & Williamson. Tuesday, the company increased its quarterly dividend 5.9% to $0.90/share. The dividend is payable on Jan. 4, 2010, to shareholders of record on Dec. 10, 2009. The ex-dividend date is Dec. 8. The current yield based on the new dividend is 7.7%.

ConocoPhillips (COP) is the the fourth largest integrated oil company in the world. Wednesday, the company raised its quarterly dividend 6% to $0.50 per share. The dividend is payable Dec. 1, 2009, to stockholders of record at the close of business Oct. 30, 2009. The current yield based on the new dividend is 4.02%.

In addition, the company also announced its plan to sell $10 billion in assets over the next 2 years. Jim Mulva, chairman and chief executive officer stated:

These actions are consistent with our objectives of creating shareholder value and improving financial flexibility while pursuing our long-term strategic initiatives. This plan capitalizes on our large resource base and our strong portfolio of projects, while providing flexibility for potential changes in business conditions. We will replace reserves and grow production from a reduced, but more strategic, asset base.

RPM International Inc. (RPM) engages in the manufacture, marketing and sale of various specialty chemical products to industrial and consumer markets worldwide. Thursday, the company declared quarterly cash dividend of $0.205/share. The dividend is payable on October 30, 2009 to stockholders of record as of October 19, 2009. The ex-dividend date is October 15, 2009. The dividend yield is 4.4%. RPM is a Dividend Achiever and has increased its dividend for the last 36 years. The current yield based on the new dividend is 4.4%.

The list of stocks that haven’t missed a dividend increase in the last 10 years continues to shrink, but there are still plenty to be found to satisfy this dividend investor. For a list of stocks with a long string of consecutive dividend increases, click here.

Disclosure: No position in the aforementioned stocks.

Comments

[pompanojack:]

I have been reading very positive things about ITT. Is that a stock that you have analyzed?

Oct 09 03:54 PM

[Shishir Nigam:]

Some additional colour on the 3 companies that you've talked about:

Reynolds - $0.90 provides a very impressive yield on a common stock. However, $0.90 dividend per quarter implies a dividend/share of $3.60 annually. Going by their latest financials, their LTM EPS was $2.13/share. That implies a 169% payout ratio. Even if I use the EPS for the year ended Dec 31, 2008 so as to leave out the bad quarters, it's a payout ratio of 79%. I hope they have some serious profits coming up in Q3 results to justify that dividend increase!

ConocoPhillips - As for COP, they haven't had a full year of positive earnings in either the 12 months ending June 30, 09 or even 12 months ending in Dec 31, 08. Going by the latest quarter alone, a $0.50 payout implies a payout ratio of 58%. Though COP has a good amount of cash cushion on its balance sheet.

RPM - RPM has an EPS of $0.958 for the year ending Aug 31, 09, implying a payout ratio of about 86%, again a pretty high payout.

Increasing dividends can reflect confidence in the future but are just as likely the result of over-optimistic management projections.

For more analysis, check out my blog: youngandinvested.com

Oct 11 01:04 AM

[Dividend Gr...:]

Actually the reason for COP's "negative earnings" in 2008 was a goodwill impairment , which is a non cash charge. Companies these days are required to evaluate their goodwill versus the carrying value of the goodwill to determine if an impairment is necessary. Without this item, COP would have achieved record earnings in 2008..


On Oct 11 01:04 AM Shishir Nigam wrote:

> Some additional colour on the 3 companies that you've talked about:
>
>
> Reynolds - $0.90 provides a very impressive yield on a common stock.
> However, $0.90 dividend per quarter implies a dividend/share of $3.60
> annually. Going by their latest financials, their LTM EPS was $2.13/share.
> That implies a 169% payout ratio. Even if I use the EPS for the year
> ended Dec 31, 2008 so as to leave out the bad quarters, it's a payout
> ratio of 79%. I hope they have some serious profits coming up in
> Q3 results to justify that dividend increase!
>
> ConocoPhillips - As for COP, they haven't had a full year of positive
> earnings in either the 12 months ending June 30, 09 or even 12 months
> ending in Dec 31, 08. Going by the latest quarter alone, a $0.50
> payout implies a payout ratio of 58%. Though COP has a good amount
> of cash cushion on its balance sheet.
>
> RPM - RPM has an EPS of $0.958 for the year ending Aug 31, 09, implying
> a payout ratio of about 86%, again a pretty high payout.
>
> Increasing dividends can reflect confidence in the future but are
> just as likely the result of over-optimistic management projections.
>
>
> For more analysis, check out my blog: youngandinvested.com

Oct 12 03:52 PM

[No Free Cake:]

Shishir, RAI has a strong free cash flow, even after dividends, for trailing twelve months (and all of at least last 3 years). You might want to explore further the divergence between earnings and cash flow. Using earnings at face value can often be misleading.

Oct 12 07:28 PM

[Graham and ...:]

RPM is overleveraged, and its dividend may not be secure. But like the other two.

Oct 13 02:21 PM