4 Dividend Stocks Increasing Distributions

by Dividend Growth Investor | November 25, 2013 1:00 am

4 Dividend Stocks Increasing Distributions

There were many companies that increased dividends[1] in the past week. I skimmed the list, and narrowed it down by eliminating any company yielding less than 2% and only having a minimal dividend growth below the historical rate of inflation. The list is further narrowed down by removing any company that has not raised distributions for at least five years in a row.

This meant that companies like Brown-Forman (BF.B[2]), which raised dividends by 13.80% to 29 cents per share, were excluded, because they yielded 1.50%. As a holder of Brown-Forman stock I am happy with that, despite the fact that shares are currently overvalued at 25.60 times forward earnings. Given the steady increase in distributions for 30 years in a row however, this dividend champion[3] is a hold, but not a buy at these prices.

The companies that met the criteria included:

National Bankshares (NKSH[4]) operates as the bank holding company for the National Bank of Blacksburg, which provides a range of retail and commercial banking services to individuals, businesses, non-profits, and local governments. The bank raised its semi-annual dividend to 58 cents per share. This marked the 15 consecutive annual dividend increase for this dividend achiever. Over the past decade, National Bankshares has managed to boost dividends by 8.50%/year.

The stock is attractively valued at 14.60 times earnings and yields 3.20%. I analyzed National Bankshares[5] last year, but never really did anything about it. While the stock is a buy, I found other shares in the past 18 months which seemed better places for my money.

Lancaster Colony (LANC[6]) manufactures and markets consumer products focusing primarily on specialty foods for the retail and foodservice markets in the United States. The company boosted its quarterly dividend by 10% to 44 cents per share. This marked the 52nd consecutive annual dividend increase for this dividend king[7]. Over the past decade, Lancaster Colony has managed to boost dividends by 6.70% per year.  The stock looks pricey at 21.40 times forward earnings, and at a current yield of 2.10%. I would need to add it to my list for further research.

The Williams Companies (WMB[8]) operates as an energy infrastructure company. The company raised quarterly distribution by 3.75% to 38 cents per share. Williams has raised dividends for 11 years in a row. Since 2011, this dividend achiever[9] has actually managed to boost distributions every single quarter. As a result, the new dividend is 16.90% above the dividend paid in Q4 2012.

The really interesting part is that Williams expects to hike dividends to $1.75 per share in 2014 and $2.11 per share by 2015. Over the past decade, Williams has raised dividends by 11% per year. The stock yields 4.30%, and seems to sell for 43 times earnings. I would need to put the company on my list for further research, although I have a hunch that the high P/E is because of its interest in Williams Partners (WPZ[10]).

The Laclede Group (LG[11]), through its subsidiaries, engages in the retail distribution, sale, and marketing of natural gas. The company raised its quarterly dividend by 3.50% to 44 cents per share. This marked the eleventh consecutive annual dividend increase for this dividend achiever.

Over the past decade, Laclede has managed to boost distributions by only 2.20% per year. The stock yields 3.75% and trades at 17.90 times earnings. Given the metrics out there, I would say this stock is probably a decent hold, although future dividend hikes would likely be limited to compensate for inflation.

To summarize, by focusing on the weekly list of companies that increase dividends, one would be able to monitor their holdings and also uncover opportunities that their regular screens might have overlooked. I am definitely interested to learn how Lancaster Colony has managed to raise dividends for over half a century, and whether it can continue this streak. I am also going to research more on Williams Companies, given the high yield and high expected dividend growth.

Full Disclosure: Long BF-B

Endnotes:
  1. companies that increased dividends:
  2. BF.B: http://studio-5.financialcontent.com/investplace/quote?Symbol=BF.B
  3. this dividend champion: http://www.dividendgrowthinvestor.com/2011/02/dividend-champions-best-list-for.html
  4. NKSH: http://studio-5.financialcontent.com/investplace/quote?Symbol=NKSH
  5. analyzed National Bankshares: http://www.dividendgrowthinvestor.com/2012/06/national-bankshares-nksh-dividend-stock.html
  6. LANC: http://studio-5.financialcontent.com/investplace/quote?Symbol=LANC
  7. this dividend king: http://www.dividendgrowthinvestor.com/2013/01/the-dividend-kings-list-keeps-expanding.html
  8. WMB: http://studio-5.financialcontent.com/investplace/quote?Symbol=WMB
  9. this dividend achiever: http://www.dividendgrowthinvestor.com/2011/01/dividend-achievers-offer-income-growth.html
  10. WPZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=WPZ
  11. LG: http://studio-5.financialcontent.com/investplace/quote?Symbol=LG

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