For the very long-term investor a stock’s Ex-dividend date is effectively inconsequential. Surely the buy-and-holder will receive his or her fair share of dividend payments over the course of a lengthy holding period. In this way, appropriateness and overall value is much more important than whether or not the investor catches the latest payout.
I recognize that this article is titled much in the same way as other ‘actionable’ articles, such that there is a beckoning ‘buy now’ bias. Likewise the underlying information remains practically the same; however, I would like to precursor the article by suggesting that price paid and the fundamental soundness of a company is much more important than receiving an extra dividend payment. With that being said, for those looking to initiate new capital, it can be disheartening to complete one’s due diligence only to realize that you missed the most recent dividend by a day or two.
Below are 7 stocks that are going Ex-Dividend in the next 2 weeks. Each has increased its dividend for at least the last 8 years.
Abbott Laboratories (ABT) – This Illinois-based healthcare company has been steadily rewarding income investors for nearly two scores, as ABT has not only paid but also increased its dividend for the last 39 years. Furthermore, a dividend has been paid for 352 consecutive quarters. Abbott Laboratories has a current yield of 3.4% and a seemingly sustainable payout ratio around 65%. For the past decade Abbott has been able to increase its annual dividend by an average rate of about 8.7%, while the average dividend growth rate over the last five years is closer to 10%. This could mean a doubling of one’s yield on cost in about eight years. Abbott is set to split into two companies by the end of this year, with the dividend payouts of the two companies set to equal the current ABT dividend. This differs from the ConocoPhillips (COP) split, in that there will be no ‘bonus dividend’. Recently, I highlighted this company as one you might want to look at before Valentine’s day. But it could be even sooner than that, as ABT goes Ex-Dividend on January 11th with a $0.48 payable dividend on February 15th.
RPM International (RPM) – This Ohio-based Specialty Chemical Company probably isn’t quite as well known as ABT, but it has nearly the same payout increase history, raising dividends for 38 consecutive years. RPM has a current yield around 3.65% and a payout ratio under 60%. For the last five years dividends have been increasing by an average rate of about 5.2%, The 10-year average rate is closer to 5.4%. Using the latter figure, the 3.65% current yield turns into about a 6.2% yield on cost in a decade. Although to be sure, one should not only look at yield on cost. Current shareholders appear to be happy, as the company estimates that 87% of RPM stockholder’s participate in the Dividend Reinvestment Plan. RPM’s Ex-Dividend date is also January 11th, with a payable $0.215 dividend on the 31st of this month.
General Dynamics (GD) – This Virginia-based Industrial Goods Company has worked in the marine, aerospace and defense industry since 1952. For the last 20 of those years, GD has been able to increase its dividend payout. General Dynamics has a current yield of 2.8% and a payout ratio under 30%. For the last five years, dividends have grown at an average rate of about 15.5% while the last decade has averaged about 12.8%. Considering the low payout ratio and strong history of dividend increases, a double digit YOC could be conceivable in the next decade and a half. Skeptics might cite a potential drawback in military demand as a concern, but 19 brokers still like a 1-year collective upside of about 13%. GD goes Ex-Dividend on January 18th, with a $0.47 payable dividend on the 10th of February.
Watsco Inc. (WSO) – This Florida-based Electronics Wholesaler doesn’t quite have the dividend history of ABT or RPM, but it can boast about an 11-year streak of increasing payouts. The 3.7% current yield appears reasonable, especially given WSO’s five-year average dividend growth rate of about 19.9% and an ever impressive 10-year mark of about 36.4% annually. Last week Watsco increased its payout by 9% to $0.62 a quarter. This was surely a welcome surprise to investors, as the last four payout increase announcements had come in the first week April. WSO goes Ex-Dividend January 11th with a payable date of January 31st.
CVS Caremark (CVS) – This Rhode Island-based Corporation has been in business over a century and currently employees about 200,000 people. Competing in the Retail Drug Store industry, CVS has increased its dividend payment for the last nine years. Admirable sure, but it falls well short of industry rival Walgreen’s (WAG) and its 36-year history of increasing payouts. Still, with more and more baby boomers needing medication, either company looks poised to take advantage of a growing demographic. CVS has a current yield of just 1.6%, but its 26% payout ratio is quite low. Dividends have been increasing over the past five years by an average rate of about 26.2%. This might seem a bit lofty moving forward, but CVS did just recently announce a 30% dividend increase to $0.165 a quarter. This payment goes Ex-Dividend on January 19, and is payable on February 2nd.
YUM Brands (YUM) – Based in Louisville, Kentucky this restaurant conglomerate actually has more total locations than Subway. Popular names include KFC, Pizza Hut and Taco Bell. YUM has a current yield of about 1.9% and a payout ratio around 45%. Additionally, YUM Brands has been able to increase its dividend payout for the last eight years. True, top competitor McDonald's (MCD) has increased payouts for 35 straight years and has a larger current yield at around 2.8%. However, if YUM can follow in the golden arches’ footsteps shareholders would do well. Every single dividend increase for YUM Brands has been in the double digits, as the company most recently announced a 14% jump. The $0.285 quarterly payout goes Ex-Dividend on Wednesday the 11th, while the pay date comes on February 3rd.
Cracker Barrel Old Country Store (CBRL) – If YUM is a too fast for you, you might be inclined to slow it down a bit (OK a whole lot) with Cracker Barrel Old Country Store. Although CBRL does force you through a maze of merchandise upon entrance, this down home Tennessee-based restaurant only derives about 20% of its sales from retail. Interestingly, the forced maze method appears to be working as CBRL reports that about 32% of restaurant guests make a retail purchase (pdf). Cracker Barrel has a streak of increasing its dividend for the last nine years, after a seven-year freeze for most of the 1990s. CBRL’s current yield around 2% is right around the S&P 500 average but the payout ratio under 30% suggests sustainability. Recently Sardar Biglari, of Biglari Holdings’ (BH) Steak N Shake and Western Sizzlin fame, made a hostile increase in Cracker Barrel stock. This could prove problematic eventually and at least from the surface looks similar to Carl Icahn and Clorox (CLX). CBRL goes Ex-Dividend on January 18th, with a $0.25 quarterly payout to be paid on February 6th.
Bonus Coverage: Oracle Corp. (ORCL) went Ex-Dividend on Monday January 9th, which is likely too late for you to do anything about it. While ORCL only has one year of dividend increases, it is a notable payout for founder Larry Ellison. His 1,104,634,580 shares will net a nice little pre-tax $66.27 million for the quarter; or about $511 a minute.