Many Companies Are Still Raising Dividends

The markets ended September with a big decline in the major indexes. Last week the volatility of the past month continued as stocks traded like a yo-yo – falling 777 points after congress failed to approve the 700 billion dollar bailout, and then rising 500 points before hitting new 52 week lows by the end of the week after the bailout was approved.

There was some negative dividend news from S&P that there were 138 dividend cuts or suspensions in the third quarter while 346 issues increased their payments to shareholders. Most of the dividend cuts were in the financial sector. Standard and Poors reported the following:

“It was the worst September for dividends since we started keeping dividend records in 1956,” says Howard Silverblatt, Senior Index Analyst at Standard & Poor’s. “During the second quarter, companies were nervous and cautious. The third quarter, however, saw many companies deciding to take action, and that action took $22.5 billion out of the pockets of investors.”

There were some bright spots however as the number of dividend increases were almost three times the number of dividend cuts or omissions.

Last week there were several companies which declared increases in their dividend payments to shareholders.

CLARCOR Inc. (CLC) Board of Directors declared an increase in the regular quarterly dividend from $0.08 per share to $0.09 per share. This increase raises the annual rate from $0.32 per share to $0.36 per share, a 12.5% increase and the 25th consecutive annual increase. The stock currently yields about 1%.

DENTSPLY International Inc. (XRAY) declared a quarterly cash dividend of $0.05 per share of common stock, an indicated annual rate of $0.20 per share. This represents approximately an eleven percent (11%) increase in the existing dividend. This dividend achiever currently yields about 0.50%.

Northwest Natural Gas Company (NWN) has increased the quarterly dividend on the company's common stock by 5.3% to 39.5 cents per share. This marked the 53rd consecutive year of dividend increases. NWN is a dividend champion that yields about 3% right now and trades at less than 20 times earnings. I plan on researching this stock further.

Speedway Motorsports (TRK) has increased the annual dividend on the company's common stock by a little over 1% to 34 cents per share. This is the seventh consecutive year that Speedway Motorsports has increased cash dividends to its stockholders. The stock currently yields 1.80%.

MFA Mortgage Investments, Inc. (MFA) announced a 10% increase in its quarterly dividend to $0.22 per share for the third quarter of 2008. Despite the fact that this stock has paid dividends for over ten years, the quarterly payments are pretty volatile from month to month. MFA's primary focus is high quality, higher coupon hybrid and adjustable-rate MBS assets. At June 30, 2008, approximately 99% of MFA's assets consisted of MBS issued or guaranteed by an agency of the U.S. government or a federally chartered corporation, other MBS rated "AAA" by Standard & Poor's Corporation, MBS-related receivables and cash. The stock currently yields over 15%.

I have found that screening the dividend news could provide you with some gems for further research. One such gem could be NWN. Furthermore with so many negative news concerning the stock market and dividend cuts in the financial sector it pays to know that there actually are companies which are confident enough in their ability to generate stable revenues and earnings which would support dividend increases.

Disclosure: None

Comments

[whidbey:]

Nice happy talk. Dividend increases are not necessarily good news, it typically means that the firm is not growing much, AND has no needs for research and development or new initiatives. There are monopolists who can reward their shareholders, but as a rule be suspicious of the management that invests in stock buy-backs or dividends.

2008 Oct 06 01:53 PM

[Dividend Gr...:]

Over the past 30 years dividend payers have outperformed non dividend payers; in addition to that dividend growers and initiators have much better long term total performance results than the rest of the pack.

But you don't have to take my word for it. Check these charts out:

www.dividendgrowthinve...

www.dividend.com/img/d...

2008 Oct 06 04:53 PM

[USC-Col 200...:]

This is promising news actually. I think it was well-researched as well. I belive the negatives of the economics are focused in the financial sectors, who are responding beautifully. They're cutting dividends to retain more earning to be used for the business. I believe American is cutting dividend and selling more common stock. The dividend cut retained earning increases negates the dilution of the common stock for Bof America. Beautiful move. If I had access cash, I would love to get in there. Because if they're weathering financial storm now, amidst the credit crunch, eventually they may hit the mark that goldman sachs' is and where lehmans bros once was in the 90-150 range per share. I'll definitely check those companies mentioned above out.

2008 Oct 06 10:21 PM