Outside of a buyout, an increased dividend payment represents one of the best pieces of news a company’s shareholders could hope for. Generally, an increasing dividend means a steady stream of income and a rising stock price, two good signs for long-term investors. A stock often remains a good buy after announcing a dividend increase. When a company raises its dividend, just as when insiders buy their company’s stock, investors on the outside can get a better gauge on a firm’s future prospects. The following companies have recently raised their dividend. Unless otherwise noted, they merit your attention as potential long-term investments.
Remember, you must buy a stock at least three business days before the record date (at least one business day before the ex-dividend date) to qualify for a dividend.
Dover Corporation (DOV) trades an average of 2.25 million shares per day, and has a market cap of $10.04 billion. Dover Corporation and its subsidiaries manufacture industrial products and components, as well as provide related services and consumables in the United States and internationally. Based on the current price and increased payout of $0.315, the stock has a forward yield of 2.397%. The new higher dividend is payable on September 15, 2011, to shareholders of record as of August 31, 2011.
Industry: Misc. Fabricated Products
Recent Price: $52.50
52 Week High: $70.15
52 Week Low: $43.23
Book Value: $26.41
At $52.50, the price is currently below the 200 day moving average of 61.96, and below the 60 day moving average of 63.41. Typically, I look at stocks negatively when trading below the 200 day moving average, but with Dover, it may be a buying opportunity. The market selling off so hard in the last week creates a lot of unfounded fear, allowing for investors to pick up quality companies at discount prices. Dover has a history of 56 years of raising their dividend, which I find impressive.
The current trailing twelve months (ttm) P/E ratio is 11.81. The company has rising revenue year-over-year of $7.13 billion for 2010 vs. $5.78 billion for 2009. The bottom line has rising earnings year-over-year of $700.104 million for 2010 vs. $356.44 million for 2009. The company's earnings before income and taxes are rising with an EBIT year-over-year of $1.03 billion for 2010 vs. $588.04 million for 2009. Looking at current assets, the stock has a trailing twelve months price to book ratio of 2.44.
Take a look at the charts below, they tell a very interesting story about Dover and it's management team.
LyondellBasell Industries NV (LYB) Produces and sells chemicals and polymers, refines crude oil, produces gasoline blending components, and develops and licenses technologies for production of polymers. LyondellBasell's Supervisory Board has authorized an increase in the dividend to $0.20 per share. The new dividend is a 100% increase from the last amount paid. The new higher dividend is payable on Sept. 7, 2011, to shareholders of record as of Aug. 17, 2011.
Industry: Chemical Manufacturing
Recent Price: $31.76
Investors have been rewarded with an increase of year-over-year revenue. Revenue reported was $41.15 billion for 2010 vs. $30.83 billion for 2009. The bottom line has rising earnings year-over-year of $10.151 billion for 2010 vs. $-2.87 billion for 2009.
The company's earnings before income and taxes are rising with an EBIT year-over-year of $2.94 billion for 2010 vs. $317 million for 2009.
Looking at current assets, the stock has a trailing twelve months price to book ratio of 10.89. At $31.76, the price is currently below the 200 day moving average of $36.65, and below the 60 day moving average of $38.47.
With the current market sell-off that impacted LyondellBasell, the August $32 strike price puts have a lot of premium currently offered. Selling the puts would likely result in missing out on the next dividend, due to the expiration date following the ex-dividend date, but offers a lower risk investment.
Scotts Miracle-Gro Company (SMG) is a manufacture of lawn and garden care products. Scotts announced a 20% increase in the cash dividend paid. The new higher dividend is payable on September 9, 2011 to shareholders of record as of August 26, 2011.
Industry: Chemical Manufacturing
Recent Price: $42.64
52 Week High: $60.62
52 Week Low: $39.99
Book Value: $11.83
Scotts is especially interesting because the last earnings reported didn't bring out sunshine for investors. In the latest quarter reported, profit fell almost 40% compared to the same period last year, and adjusted earnings fell also, but not as much with a a drop of 10%.
We revived our full-year guidance and now expect adjusted earnings of $2.95 to $3.05 a share.
At an annual rate of profit near $3.00 per share, the higher dividend does appear to be safe, despite a few storm clouds in the last quarter. Based on the current price and increased payout of $0.30, the stock has a forward yield of 2.82%. The current trailing twelve months (ttm) P/E ratio is 15.24.
For the same fiscal period year-over-year, revenue has improved to $3.14 billion for 2010 vs. $2.98 billion for 2009. The bottom line has rising earnings year-over-year of $204.1 million for 2010 vs. $153.30 million for 2009. The company's earnings before income and taxes are rising with an EBIT year-over-year of $384.60 million for 2010 vs. $297.60 million for 2009.
At $42.64, the price is currently below the 200 day moving average of $53.20, and below the 60 day moving average of $51.64. The price has largely followed the entire market in the past couple of weeks.
I use a proprietary blend of technical analysis, financial crowd behavior, and fundamentals in my short-term trades, and while not totally the same in longer swing trades to investments, the concepts used are similar. Based on my criteria, I have come to the following conclusion: This one is worth the time to investigate further for an ideal entry price to either write put options or buy the stock. Of course that in itself does not mean you should, but you may want to use this article as a starting point of your own research with your financial planner.
I use Seeking Alpha, Edgar Online, Google Finance, MSN Money, cnbc.com, Zacks and Yahoo Finance for most of my data.