5 Companies With Consistently Growing Dividends

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Includes: HNI, JNJ, LMT, PNY, STX
by: Kevin Quon

When investors seek income from their investments they are often drawn to the appeal of higher yields with limited regard for the stability of their dividends. More importantly, the pursuit of higher distributions tends to result in a consolidation towards several key sectors or industries whose conditions allow for such higher yields. As a result, income investors can often find themselves highly exposed to centralizing their portfolio around areas such as real estate, oil, tobacco, telecommunications and etc.

While fine sectors in themselves from an investment standpoint, the elementary lesson every investor holds dear to heart remains the need to stay diversified. Diversification after all is one of the simplest forms of protection against sector-specific catastrophe. The following companies therefore offer a glimpse into some additional areas of investment. Each of these companies currently average around a 4% yield as of May 30, 2012. A look at their dividend histories also shows strong growth in a trend that appears likely to continue.

Company Name Market Cap. Beta Dividend Yield (5/30/12)
Lockheed Martin Corporation (NYSE:LMT) $26.84 Billion 0.62 4.83%
Seagate Technology (NASDAQ:STX) $10.34 Billion 2.50 4.11%
Johnson & Johnson (NYSE:JNJ) $170.85 Billion 0.52 3.92%
Piedmont Natural Gas Co. (NYSE:PNY) $2.13 Billion 0.43 4.04%
HNI Corporation (NYSE:HNI) $1.04 Billion 1.35 4.19%

Aerospace

Lockheed Martin Corporation. As a leading company in the field of defense and aerospace, Lockheed continues to excel beyond analyst expectations even as it recently topped the last quarter's earnings by almost 15%. Though threatened by cuts to defense spending, the company has continued to reduce its overall costs by cutting its workforce and through other measures of belt tightening. Yet in many ways, these cost saving measures have been the normalized routine of business as the company has seen little reason to cut its dividend. The company recently raised its dividend by 33% and increased share buyback by $1 billion.


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Hard Drives

Seagate Technology. While the future of disk storage may undoubtedly lay in the use of solid state drives, the sheer storage capacity of hard-disk drives continues to remain a lucrative opportunity for Seagate in the present. As essentially one of the last two hard-disk drive manufacturers remaining after massive consolidation, Seagate only effectively competes against rival Western Digital (NYSE:WDC) as Toshiba's (OTCPK:TOSBF) share of the market remains practically insignificant. Combined with the vast expansion of cloud servers as the need for disk storage moves off location, and Seagate continues to roll in more cash than ever before. The company raised its share buyback amount and even comfortably raised its dividend by 39%.


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Healthcare

Johnson & Johnson. As a titan in its field of healthcare around the world, the company manufactures everything from prescription drugs, consumer products, and even medical devices. The company has continually supported its shareholders with a solid and stable return throughout the years. The chart below stands as a testament to its growing distributions with much consistency. The company most recently raised its dividend by 7%, marking the 50th straight year in doing so. With a sustainable payout ratio of 62%, the company appears poised to keep the up trend.


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Natural Gas Distributor

Piedmont Natural Gas Co. As natural gas prices linger near all-time lows, gas utility companies like Piedmont have continued prosper with cheap input costs. The company serves about a million customers throughout the Southeastern states of North Carolina, South Carolina, and Tennessee. Though revenue has fallen with lower natural gas prices as the company reduces its billing amount to customers, Piedmont has continued to remain highly profitable throughout the years. Piedmont recently approved an increase in its dividend for the 33rd consecutive year, a trend that has reinforced its commitment to shareholders.


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Office Furniture

HNI Corporation. Founded in 1944, HNI Corporation has served as a leading designer, manufacturer, and marketer of office furniture products throughout North America and in the China. The company is the second-largest office furniture manufacturer in the world and is the number one gas and wood burning fireplace manufacturer in the United States. The company recently raised its quarterly dividend to $0.24 per share, a 4.3% increase from the prior dividend. As seen in its history below, the company's consistent commitment to increase the return value to shareholders is a welcome sight for income investors.


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Please refer to my standard disclaimer statement found here.

Disclosure: I am long STX.

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