Dividend Yield: 2.5%
Last Dividend Increase: 14%, August 2012
It’s not a stretch to imagine that a company whose CEO acknowledges “there’s room for” a dividend increase … well, has room for a dividend increase.
It’s not that International Paper doesn’t pay dividends or hasn’t increased its payout, it’s just that its recent history is a little inconsistent. After a dramatic cut from 25 cents to just 3 cents in 2009, increases have come in spurts — three consecutive quarters at the 3-cent level were followed by three at 13 cents, one quarter at 19 cents and six at 26 cents.
So we’re actually above the original dividend … we just got there in a loopy way, and we’re only a penny better after four years.
IP shares themselves are doing well — with 21% year-to-date gains, they’re still ahead of the broader market, so shareholders aren’t exactly banging down the door. Still, IP sits on more than $900 million in cash, and brought in $478 million in free cash flow just to support a quarterly payout of $132 million. A 25% hike here would get IP to the 3% yield threshold.
After all … there’s room.