With earnings for most of the biggest stocks behind us, the quarterly reports and subsequent dividend increases announced in the last several days concern companies that are a bit smaller. But some of the high yield dividend stocks increasing their payouts are worth a look even if their market cap isn’t huge. Take Cincinnati Financial (NASDAQ: CINF), that now yields about 6%.
There must be something in the water in Ohio when it comes to this week’s lineup of dividend stocks increasing their quarterly dividends. Three companies — two in Cincinnati and one near Cleveland — have decided to be more generous to their shareholders.
Here’s the full list of 6 stocks that have boosted dividends in the last several days:
Dividend Stock – Lorillard
Lorillard, Inc. (NYSE: LO) is the third largest manufacturer of cigarettes in the United States, and a staple among dividend stock investors. Just today, the company announced its Board of Directors approved a +12.5% increase in the quarterly dividend on its common stock.
The dividend, upped from $1.00 per share to $1.125 per share, is payable on September 10 to stockholders of record as of September 1. That gives LO stock a dividend yield of about 6% at current valuations.
Tobacco is highly regulated, but that has only proven to help enact a legalized monopoly of sorts for Big Tobacco with just a few companies like Lorillard and Reynolds American (NYSE: RAI) controlling the marketplace. That means very reliable revenue, and thus reliably plump dividends.
Dividend Stock – ITC Holdings
ITC Holdings Corp. (NYSE: ITC) said Wednesday it will increase its quarterly dividend 4.7% to33.5 cents. The dividend will be paid Sept. 15 to shareholders of record on Sept. 1.
ITC, through its subsidiaries, engages in the transmission of electricity in the United States. At current valuations, the new dividend increase gives ITC Holdings a yield of over 2.3%.
Utility stocks are stable businesses and reliable dividend providers. Though ITC is relatively small with a market cap of under $3 billion, it is still a decent dividend play for investors. What’s more, shares have added over +10% so far in 2010, making it a decent equity play on top of the payout.
Dividend Stock – Nordson
Nordson Corp. (NASDAQ: NDSN) raised its quarterly dividend by 2 cents, to 21 cents a share, payable Sept. 14 to shareholders of record Aug. 31 — its 47th straight annual increase. That brings the current yield in this dividend stock to about 1.2%.
The Westlake, Ohio-based maker of dispensing and testing equipment also reported that its earnings soared by 131% in its fiscal third quarter, to $55.3 million, or $1.61 a share from $24 million, or 71 cents a share, in fiscal Q3 of 2009. Sales rose 25%.
NDSN says it ranks 16among public companies with the longest record of consecutive dividend increases.
Increased spending by chip makers and other tech companies has boosted the company. The tech firms need NDSN’s equipment, which applies adhesives, sealants and coatings.
NDSN also issued earnings guidance for the fiscal fourth that is above current analyst expectations. In early August, BB&T Capital upgraded NDSN to buy from hold.
Dividend Stock – Cincinnati Financial
A half century of rising dividends, and this year isn’t an exception. Cincinnati Financial Corp. (NASDAQ: CINF) will raise its dividend by a half cent to 40 cents a share, Oct. 16 to shareholders of record Sept. 22. That will bring the yield to about 6%.The property and casualty insurer also pointed out it has an annual growth of 6% for the past five years.
CINF’s strong capital and cash flow generation have allowed it to increase its payout. This comes despite the fact that its compounded annual growth rate minus written premiums is actually a minus 0.6%. The company, however, has low levels of debt.
CINF has a market cap of $4.36 billion, so it’s a decent financial player. Its P/E is 8.54. EPS in the latest period was $3.13. Earlier this week EVA Dimensions increased its rating of CINF to buy from overweight.
Dividend Stock – American Financial
American Financial Group Inc. (NYSE: AFG) said it will increase its annual dividend by 18%, to 65 cents a share from 55 cents. Dividends will be paid on a quarterly basis of 16.25 cents per share beginning in October. It had been yielding 1.9% before the bump.
The Cincinnati-based insurer has increased its dividend in each of the last six years. Fitch earlier this month raised AFG’s ratings outlook to stable from negative.
Fitch kept the company’s rating at A-. Fitch said that the insurer’s bond investment portfolio had improved and its operating results are strong.
SmarTrend puts AFG as No. 1 in the multi-line insurance industry, measured by relative performance.
AFG’s net operating earnings dropped to $102 million, or 91 cents a share, in the second quarter. That was down 13% from the record results of a year earlier, but was consistent with its expectations, the company said.
Also in the second quarter of 2010, AFG repurchased 2.7 million shares of common stock at an average price per share of $27.82. The insurer is now trading around $29.
AFG’s market cap is $3.14 billion. It’s P/E stands at 6.62.
Dividend Stock – Marten Transport
On the smaller side, Marten Transport Ltd. (NASDAQ: MRTN) joins the ranks of companies increasing dividends. Trucking companies are doing OK, as shipping begins to creep up from recessionary levels.
Witness Marten. The firm announced that it will begin paying dividends. Its 2 cent a share initial dividend for the quarter ended June 30, is payable Sept. 10 to stockholders of record Aug. 30. The Mondovi, Wis.-based firm primarily hauls refrigerated cargo.
Marten was founded in 1946 and has been public since 1986. It has distribution services in Canada and Mexico as well as the United States.
Net income totaled $5.16 million in the second quarter of 2010 versus $4.477 million in the year-earlier period. Diluted EPS was 23 cents versus 20 cents.
Operating income rose to $9.193 million from $7.5 million a in the second quarter of 2009.The fundamentals: Market cap of $435 million and a P/E of 26.
As of this writing, Wayne Faulkner did not own a position in any of the stocks named here.
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