9 Income Stocks with Stable Payouts Raising Distributions

by Dividend Growth Investor | July 16, 2012 10:30 am

9 Income Stocks with Stable Payouts Raising Distributions

Several dividend paying companies with long histories of dividend growth raised distributions over the past week. These companies pay stable distributions to shareholders and have regularly raised them for at least five years each. The companies include:

Enterprise Products Partners (NYSE:EPD[1]) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals in the United States and internationally. This master limited partnership raised its quarterly distributions to 63.50 cents per unit. This is the fourth distribution increase for this dividend achiever, which has boosted distributions for limited partners for 15 years in a row. Yield: 4.90% (analysis[2])

Plains All American Pipeline (NYSE:PAA[3]), through its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil, refined products, and liquid petroleum gas (LPG) products in the United States and Canada. The company operates in three segments: Transportation, Facilities, and Supply and Logistics. This master limited partnership[4] raised its quarterly distributions to $1.065 per unit. This is the fourth distribution increase for this dividend achiever, which has boosted distributions for limited partners for 12 years in a row. Yield: 5.10%

Genesis Energy (NYSE:GEL[5]) operates in the midstream segment of the oil and gas industry in the Gulf Coast region of the United States. It operates through three divisions: Pipeline Transportation, Refinery Services, and Supply and Logistics. This master limited partnership raised its quarterly distributions to 46 cents per unit. This is the fourth distribution increase for this dividend achiever, which has boosted distributions for limited partners for 9 years in a row. Yield: 6%

Targa Resources Partners (NYSE:NGLS[6]) provides midstream natural gas and natural gas liquid (NGL) services in the United States. The company operates in two divisions, Natural Gas Gathering and Processing, and Logistics and Marketing. This master limited partnership raised its quarterly distributions to 64.25 cents per unit. This is the fourth distribution increase for this dividend achiever, which has boosted distributions for limited partners for 6 years in a row. Yield: 6.60%

Healthcare Services Group (NASDAQ:HCSG[7]), together with its subsidiaries, provides housekeeping, laundry, linen, facility maintenance, and dietary services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. It operates in two segments, Housekeeping and Dietary. The company raised its quarterly dividend to 16.375 cents per share. Healthcare Services Group has boosted distributions for ten years in a row. Yield: 3.10%

Cummins (NYSE:CMI[8]) designs, manufactures, distributes, and services diesel and natural gas engines, and engine-related component products worldwide. It operates in four segments: Engine, Components, Power Generation, and Distribution. The company raised its quarterly dividend by 25% to 50 cents per share. Cummins has boosted distributions for seven years in a row. Yield: 2.40%

A. O. Smith (NYSE:AOS[9]) engages in the manufacture and sale of water heaters and boilers to the residential and commercial markets primarily in the United States, Canada, and the People’s Republic of China. The company raised its quarterly dividend by 25% to 20 cents per share. This dividend achiever[10] has boosted distributions for 19 years in a row. Yield: 1.70%

Fastenal (NASDAQ:FAST[11]), together with its subsidiaries, operates as a wholesaler and retailer of industrial and construction supplies in the United States and internationally. This dividend achiever raised its quarterly distributions by 11.80% to 19 cents per share. This marked the 14th consecutive annual dividend increase for this dividend achiever. Yield: 1.80%

Ryder System (NYSE:R[12]) provides transportation and supply chain management solutions. It operates in three segments: Fleet Management Solutions, Supply Chain Solutions, and Dedicated Contract Carriage. This dividend stock raised its quarterly distributions by 6.90% to 31 cents per share. This marked the 8th consecutive annual dividend increase for this dividend achiever. Yield: 3.70%

Overall, I find the master limited partnerships like Enterprise Product Partners, Plains All American Pipeline and Genesis to be attractively priced in the current low interest environment. These partnerships manage to boost distributions regularly, and provide above average yield and distribution growth opportunities. An increase in interest rates and increased competition for acquiring new projects are the main risks that face that sector. Despite the fact I am bullish on pipeline MLPs, I would still not put more than 10% to  15% of my portfolio in it.

For the remaining companies boosting dividends, I used my entry criteria[13] to determine their attractiveness for further research. Cummins, AO Smith and Fastenal are yielding less than the 2.50% initial yield I require. Healthcare Services Group yields 3.10%, but at this point cannot cover distributions from current earnings. This is one of the reasons why distributions have not increased by much over the past two years.

Ryder System is the only company, whose stock appears fairly priced at the moment. Unfortunately, it has only raised distributions for eight years in a row. However, I do plan on further analyzing the company in detail, in order to determine whether it will be a good fit for my income portfolio.

Full Disclosure: Long EPD

 

 9 Income Stocks with Stable Payouts Raising Distributions[14]
 9 Income Stocks with Stable Payouts Raising Distributions[15]

Endnotes:
  1. EPD: http://studio-5.financialcontent.com/investplace/quote?Symbol=EPD
  2. analysis: http://www.dividendgrowthinvestor.com/2012/04/enterprise-products-partners-epd.html
  3. PAA: http://studio-5.financialcontent.com/investplace/quote?Symbol=PAA
  4. This master limited partnership: http://www.dividendgrowthinvestor.com/2009/03/master-limited-partnerships-mlps-island.html
  5. GEL: http://studio-5.financialcontent.com/investplace/quote?Symbol=GEL
  6. NGLS: http://studio-5.financialcontent.com/investplace/quote?Symbol=NGLS
  7. HCSG: http://studio-5.financialcontent.com/investplace/quote?Symbol=HCSG
  8. CMI: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMI
  9. AOS: http://studio-5.financialcontent.com/investplace/quote?Symbol=AOS
  10. This dividend achiever: http://www.dividendgrowthinvestor.com/2011/01/dividend-achievers-offer-income-growth.html
  11. FAST: http://studio-5.financialcontent.com/investplace/quote?Symbol=FAST
  12. R: http://studio-5.financialcontent.com/investplace/quote?Symbol=R
  13. my entry criteria: http://www.dividendgrowthinvestor.com/2011/03/my-entry-criteria-for-dividend-stocks.html
  14. [Image]: http://feedads.g.doubleclick.net/~a/Xb0f_j9CBzai1flnDNfzp4ZLIpo/0/da
  15. [Image]: http://feedads.g.doubleclick.net/~a/Xb0f_j9CBzai1flnDNfzp4ZLIpo/1/da

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