Over the past week, income stocks announced plans to boost distributions to shareholders. Of the lengthy list of dividend increases, I have only included companies which have managed to raise distributions for more than five years in a row. In addition, I have separated the stocks by group, while also providing my commentary on each group.
Master Limited Partnerships
Master limited partnerships are typically pass-through entities, which distribute a large portion of their cash flows to investors. Most MLPs are pipelines, which transport oil and gas, although there are others like Alliance which mines for coal.
For MLPs, I typically try to focus on pipelines, since the volume of carbons transported is typically very stable, which bodes well for cash flows and therefore results in dependable distributions to unit holders. In addition, I also focus on coverage of distributions and prefer it to be either trending lower or at least flat for a long period of time.
Enbridge Energy Partners (NYSE:EEP) owns and operates crude oil and liquid petroleum transportation and storage assets, as well as natural gas gathering, treating, processing, transmission, and marketing assets in the United States. This master limited partnership boosted quarterly distributions to 54.35 cents per unit. Enbridge Energy Partners has boosted distributions for 6 years in a row. I own the i-shares of Enbridge Energy Partners (NYSE:EEQ), and which distribute shares instead of cash to me every quarter. EEQ and KMR are examples of i-shares for Enbridge Energy Partners and Kinder Morgan Partners (NYSE:KMP), which make them ideal for tax-deferred accounts. Yield: 7.3%
Alliance Holdings (NASDAQ:AHGP), through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. The general partner of Alliance Resources boosted quarterly distributions to 69.75 cents per unit. Alliance Holdings has boosted distributions for 7 years in a row. Yield: 6%
Alliance Resource Partners (NASDAQ:ARLP) engages in the production and marketing of coal primarily to utilities and industrial users in the United States. This master limited partnership boosted quarterly distributions to $1.0625/unit. Alliance Resource Partners has boosted distributions for 10 years in a row. Yield: 7.1%
Exterran Partners (NASDAQ:EXLP) provides natural gas contract operations services to customers in the United States. This master limited partnership boosted quarterly distributions to 50.25 cents per unit. Exterran Partners has boosted distributions for 6 years in a row. Yield: 9%
Dividend champions are companies which have managed to boost distributions for at least 25 years in a row. Four such companies include American States Water (NYSE:AWR), Dover (NYSE:DOV), Federal Realty Investment Trust (NYSE:FRT) and Carlisle (NYSE:CSL).
I currently find Dover to be attractively valued, and would add it to my list for future research. I find Federal Realty Trust and Carlisle to be trading at higher valuations than what I would like to pay for them.
American States Water seems like a dependable utility, which unfortunately doesn’t yield as much as one would expect a slow growth business to yield. The hunger for yield has pushed investors to bid up assets like utilities and REITs close to bubble territory.
American States Water, together with its subsidiaries, provides water, electric, and contracted services in the United States. This dividend king raised its quarterly distributions by 26.8% to 35.5 cents per share. American States Water has boosted distributions for 58 years in a row. Yield: 3.5%
Dover manufactures and sells a range of specialized products and components, and provides related services and consumables. The company operates in four segments: Communication Technologies, Energy, Engineered Systems, and Printing & Identification. This dividend king raised its quarterly distributions by 11.1% to 35 cents per share. American States Water has boosted distributions for 58 years in a row. Yield: 2.6%
Federal Realty Investment Trust operates as a real estate investment trust, which engages in the ownership, management, development, and redevelopment of retail and mixed-use properties. This dividend champion raised its quarterly distributions by 5.80% to 73 cents per share. Federal Realty Investment Trust has boosted distributions for 45 years in a row. Yield: 2.7%
Carlisle operates as a diversified manufacturing company in the United States and internationally. This dividend champion raised its quarterly distributions by 11.1% to 20 cents per share. Carlisle Companies has boosted distributions for 36 years in a row. Yield: 1.6%
Current Dividend Achievers and Future Dividend Achievers
The dividend achievers index includes companies which have raised distributions for at least ten consecutive years in a row. I typically prefer to invest in companies that have a proven track record of 10 years in consistent dividend increases, in order to avoid purchasing companies whose streak is a result of a pure luck of being at the right time at the right place in an economic cycle.
Of the companies listed above, Norfolk Southern looks like a promising candidate for further research, since it meets all of my entry criteria at the moment. Buffett finds railroads to be a long-term bet on the U.S., and I agree with him that the volume of goods transported over the next century is going to increase.
Norfolk Southern (NYSE:NSC), through its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods primarily in the United States. This dividend achiever raised its quarterly distributions by 6.4% to 50 cents per share. Norfolk Southern Corporation has boosted distributions for 12 years in a row. Yield: 2.7% (analysis)
Microchip Technology (NASDAQ:MCHP) engages in the development, manufacture, and sale of semiconductor products for embedded control applications. This dividend achiever raised its quarterly distributions to 35.1 cents per share Microchip Technology has boosted distributions for 11 years in a row. Unfortunately, the company has a very high dividend payout ratio, which has caused it to boost distributions only by a nominal amount each quarter. Yield: 4.1%
Murphy Oil (NYSE:MUR), through its subsidiaries, engages in the exploration and production of oil and gas properties worldwide. This dividend achiever raised its quarterly distributions by 13.6% to 31.25 cents per share. Murphy Oil has boosted distributions for 16 years in a row. Yield: 2.3%
Hawkins (NASDAQ:HWKN) distributes bulk chemicals, as well as blends, manufactures, and distributes specialty chemicals. The company operates through two segments, Industrial and Water Treatment. This dividend stock raised its quarterly distributions by 6.3% to 34 cents per share. Hawkins has boosted distributions for 8 years in a row. Yield: 1.7%
STERIS (NYSE:STE), together with its subsidiaries, develops, manufactures, and markets infection prevention, contamination control, microbial reduction, and surgical support products and services for healthcare, pharmaceutical, scientific, research, industrial, and governmental customers worldwide. This dividend stock raised its quarterly distributions by 11.8% to 19 cents per share. STERIS has boosted distributions for 8 years in a row. I would consider researching the company for future. Yield: 2.4%
Full Disclosure: Long EEQ