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6 Notable Dividend Increases So Far in September

Microsoft and McDonald's lead the way for increases

   

In this article, I have highlighted several notable companies, which have approved dividend increases in the month of September 2013. The thing that makes these companies notable is the fact that they have not only achieved a long streak of consecutive dividend increases, but also keep showing a tenacity to continue rewarding shareholders with higher distributions over time. In addition, most of these companies provide meaningful current income to shareholders. The companies that boosted dividends include:

Philip Morris (PM), through its subsidiaries, manufactures and sells cigarettes and other tobacco products. The company raised dividends by 10.60% to 94 cents per share. This dividend paying stock has consistently raised distributions since the spin-off from Altria (MO) in 2008. The average rate of dividend increase since 2008 has been 12.70%. The stock is attractively valued at 17 times earnings and yields 4.16 %. I like the long-term growth picture behind this international tobacco conglomerate so much, that it has been my largest portfolio holding for several years in a row. Check my analysis of Philip Morris International

McDonald’s (MCD) franchises and operates McDonald’s restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company raised dividends by 5.20% to 81 cents per share. This was the lowest rate of increase since 2002, when dividends were raised by only 4.40%. The five year dividend growth rate is 13.90% per year.

However, variability in dividend growth rates are something normal and to be expected in a long-term dividend holding. This dividend champion has raised distributions for 37 years in a row. The stock is attractively valued at 17 times earnings and yields 3.34%. I recently added to my position in the stock, and would buy more subject to availability of cash. Check my analysis of McDonald’s.

Realty Income (O) is a publicly traded real estate investment trust. The company raised monthly dividends to 18.185 cents per share. This dividend achiever has raised distributions for 19 years in a row. The five year dividend growth rate is low at 1.50% per year.

However, this period includes the Financial Crisis, which led to steep dividend cuts across the REIT sector. The stock is valued at 40 times earnings and yields 5.50%. I recently added to my position in Realty Income, with a purchase on Friday. Check my analysis of Realty Income.

Microsoft (MSFT) develops, licenses, and supports software, services, and hardware devices worldwide. The company raised dividends by 21.70% to 28 cents per share. This dividend achiever has raised distributions for 11 years in a row. The five year dividend growth rate is 15.10% per year. While the stock is attractively valued at 13 times earnings and yields 3.42% %, I am not able to determine if 20 years from now it would have the same durable competitive advantages in has today. Check my analysis of Microsoft.

YUM! Brands (YUM), together with its subsidiaries, operates quick service restaurants in the United States and internationally. The company raised dividends by 10.40% to 37 cents per share. This dividend achiever has raised distributions for ten years in a row. The five year dividend growth rate is 17.80% per year. The stock is valued at 24 times earnings and yields 2.05%. The company has had some short-term headwinds in China, which would likely create opportunities to accumulate the stock on weakness. I do not believe these short-term issues will affect the long-term growth potential of Yum Brands. I would look forward to adding to my position in Yum! Brands on dips below $60 per share. Check my analysis of YUM! Brands.

W. P. Carey (WPC) is an independent equity real estate investment trust. The company raised its quarterly dividends to 86 cents per share. This dividend achiever has raised distributions for 16 years in a row. This REIT yields 5.17%. I had been following dividend increases in W.P. Carey for several years, and was aware of the potential for strong dividend growth after 2012. For whatever reason however, I failed to pull the trigger. Sometimes, failing to act timely on companies to buy can result in missed opportunities, which are not reflected on your brokerage statements or tax returns.

Full Disclosure: Long PM, MCD, O, YUM


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