Diesel engine giant Cummins (CMI) would seemingly be a mixed bag in the wake of the Great Recession. But this stock is actually running hot in part thanks to improving vehicle sales, as well as because of increased political and economic uncertainty that has led to high demand for its power generators.
Cummins only yields about 1.8% in dividends, but its payout just soared from 50 cents quarterly to 62.5 cents per quarter for a 25% dividend hike. Furthermore, this is just more than 30% of the current year’s EPS projection from Standard & Poor’s.
And Cummins didn’t just keep its dividend during the downturn, it increased it — going from 12.5 cents per quarter at the start of 2008 to five times that currently.
That’s an encouraging sign for future dividend growth.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.