Ho Hum, J&J Raises Dividend – Why Shares Should Be Bought
April 30th, 2010 | Posted by tipsHo hum…Johnson & Johnson (JNJ) has increased its dividend for 2010 by 10.2%. The stock has essentially gone nowhere over the past 8 years – since 2002. However:
Earnings per share have doubled over this period (See latest earnings call transcript here).
Dividends per share have tripled over this period.
J&J used to trade at a P/E multiple of 26x back in 2002 and now trades close to 13x. Net profit margins are actually higher now than they were in 2002, and return on equity has been fairly flat in the mid to high twenties. The company’s debt position has grown slightly since 2002, however it sits at a very manageable level currently.
Pharmaceuticals are a tricky business as drugs come off patent and new drugs are hard to come by but J&J is only about 40% pharma. Consumer healthcare and medical devices provide more stable earnings to bolster the company year after year. The stock looks attractive right now at historic low P/Es.
WisdomTree’s Brazilian Real ETF: Keeping It Real?
April 30th, 2010 | Posted by tipsAfter writing an article about the attractiveness of Brazilian bonds, a comment on the article suggested many might be interested in the WisdomTree Dreyfus Brazilian Real ETF (BZF). A quick look at the 2-yr. chart tells one that this BZF ETF is indeed worth an investor’s interest (see below).
click to enlarge
This chart looks very much like a “cup with a handle”. This chart formation often indicates that the underlying entity is about to take off. If you add Brazil’s great underlying fundamentals to this, you are more assured that this is likely a good investment. Brazil is an emerging economy. It is rich in natural resources. It is currently running a trade surplus of over $40B/year. It is oil independent. In fact it is a net oil exporter. It has plentiful fresh water. It is the world’s eighth largest economy with a GDP of $1.6T. It has highly rated bonds, even in these times of low ratings. Additionally, the Real Chart shows that it is likely to have good appreciation vs. the USD (see below).
On this chart lower on the Y-axis means the Real is worth more. Except for the flight to the USD brought on by the 2008 crash, the Real seems to have a good history of appreciating against the USD. It is likely to do so in the future.
The description (from TD Ameritrade) of the WisdomTree Dreyfus Brazilian Real Fund BZF ETF is below:
The fund seeks to achieve total returns reflective of both money market rates in Brazil available to foreign investors and changes in value of the Brazilian Real relative to the U.S. dollar. The fund normally invests in short term securities and instruments designed to provide exposure to Brazilian currency and money market rates. It intends to exposure to Brazilian currency markets by investing primarily in short term U.S. money market securities and forward currency contracts and swaps. The fund is non diversified.
The value of the shares of a currency exchange traded product relates directly to the value of the foreign currency held by the particular product. This creates a concentration risk associated with fluctuations in the price of the applicable foreign currency. Unique risk factors of a foreign currency include national debt levels and trade deficits, domestic and foreign inflation rates, domestic and foreign interest rates, investment and trading activities of institutions and global or regional political, economic or financial events and situations. Currency products may not be suitable for all investors. Many currency products are not investment companies registered under the Investment Company Act of 1940.For a more complete discussion of risk factors applicable to each currency product, carefully read the particular product’s prospectus.
Investments in bond funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Bonds and bond funds will typically decrease in value as interest rates rise.
Good luck trading.
Penn West Energy Fair Value Estimate
April 30th, 2010 | Posted by tipsIt’s been awhile since I’ve commented on Penn West Energy Trust (PWE) — these days, I save my stock specific analysis for Enlightened American Premium members — but I have blogged a bit about PWE in the past and so will share some brief comments.
The arrival of Murray Nunns has definitely invigorated Penn West on the operational side. F&D costs are down, reserves are being defined and exploration prospects are being put in clear focus, with three promising plays being primed for horizontal drilling. The company reduced debt by over $1B as well so Nunns has undoubtedly made positive changes at the company. PWE has also made a key strategic shift to more oily/liquids production in a very weak gas market, with 69% of proved reserves in the oil category.
Unfortunately, Penn West is still running a negative sustainable free cash flow ratio, with capital expenditures + distributions overrunning the cash flow generated. This may be a moot situation as PWE plans on converting to a corporation in the coming months and as a result, will be lowering their payouts to execute more of a growth strategy needed to sustain a corporate structure.
So what’s the company worth? With a roughly 500MMBOE equivalent in proved reserves, I would peg fair value at ~$25 per unit but a few factors complicate this assessment. Management asserts new horizontal drilling techniques will allow them to recover substantially more oil and claim more reserves. In the past, I would be skeptical but with Nunns onboard, I am inclined to believe them. However, even with new reserves, there is still a risk that PWE issues more dilutive equity before converting to the corporate structure which would lower fair value per share.
With all these factors in consideration, I am using $25 as a fair value target, with the company’s prospects, new focus and oiliness offsetting further dilution. While this number is lower than my initial buy point, the trust’s high payout levels over the past three years means my stake, including distributions, is a net winner in my actual portfolio.
Exelon Corp: Four Reasons Why It’s a Good Deal
April 30th, 2010 | Posted by tipsFirst and foremost in my thinking these days is relative market risk of any position in my portfolio. What I see as high valuations have prevented me from opening any new equity positions so far this year and for much of 2009. In fact, before Exelon (EXC), my sole purchase this year has been that of iShares Barclays 20+ Year Treasuries Bond ETF (TLT) on February 11th, 2010 at $90.12 and I see it as insurance against a declining stock market and troubles in the eurozone.
April 28, 2010 was a day filled with important events for the market. No big bombs being dropped. Nothing like the previous day’s market shocking S&P downgrades of Greece’s debt from investment grade down to junk and Portugal’s debt by two notches. (Everyone knew this was coming and more of these sovereign debt downgrades are certainly on the way.)
The Fed’s policy statement was released with the infamous “likely to warrant exceptionally low levels of the federal funds rate for an extended period” clause, returning calm to the markets. (Oh, how quickly we forget.) Also, HP (HPQ) announced its acquisition of Palm (PALM). Hardly a surprise given Palm’s miserable latest financials and recent announcements that they were seeking a buyer; it nevertheless gave techs a reason to stay in the black.
In the meantime, I was happily bottom fishing in the currently under-appreciated by Wall Street Utilities sector. Utilities have significantly outperformed the markets during the crash, but have been major under-performers since then, as general markets quickly recovered. In looking at the sector over the past several weeks, I identified Excelon (see earnings call transcript here) as a potential Buy. When it stubbornly moved sideways around its long-term resistance level, that was my cue to jump in and I picked up shares at $43.01.
There are four main reasons why I specifically see Exelon Corp., the largest nuclear operator in the U.S., as a good deal at this price level:
a) A reasonably safe, nearly 5% dividend.
b) Predictable cost and demand for electricity.
c) Below peer forward looking and current P/Es of 10 – 11.
d) Current valuation assumes cheap natural gas and no carbon legislation.
Of course, just like with any other investment, there are risks. When I shared my purchase decision privately with Vitaliy Katsenelson, a fellow Seeking Alpha Contributor, he responded with a brief on why this is a $25 stock, citing unfunded pension liabilities, limited growth and impaired cash flows. Sounds a lot like the U.S. as a whole, but with a higher yield, doesn’t it?
Dendreon’s Provenge Gets FDA Approval – Now What?
April 30th, 2010 | Posted by tipsWe have been closely following Dendreon (DNDN) since back in 2003 when they had their first successful Phase 3 results for their immunotherapy treatment for prostate cancer, then known as sipuleucel-T.
Provenge, as it is now called, was finally approved by the FDA Thursday. Provenge is a whole new paradigm for treatment: instead of directly attacking the cancer, it “trains” the body’s own immune system to do the job. So far, Provenge has only been tested in men with advanced cancer (and weaker immune systems) and the fact that it positively effects survival in that population could be an indication that it may be even more effective when given to earlier-stage patients (with stronger immune systems).
One unusual aspect of Provenge is that the company is patenting their “antigen delivery cassette” process used to do the “training” of the white blood cells drawn from each patient. If and where the patent holds up, it would be extremely difficult to create a “generic” version of Provenge without licensing technology from Dendreon. Thus they have potentially stronger intellectual property protection for Provenge (and any future immunotherapeutical treatments developed using the same ADC process) that is typical for most drug company products.
Provenge will be Dendreon’s first product and another unusual aspect of the situation is that they retain all the rights for the immunotherapy worldwide. It is rare for a biotech company with no revenue stream to get a drug to FDA approval without having been constrained to sell off some of the marketing rights to raise funding along the way. The company has long planned to handle sales and distribution in North America itself, and until today, was thought to be negotiating a rest-of-world (ROW) rights agreement (or agreements) with a company(ies) who can manage European and Asian approvals, sales, and distribution…but at their teleconference yesterday afternoon, they announced they have suspended those negotiations and instead will be opening direct discussions with Euro and Asian regulators themselves. This means that while the company will have to come up with the funding for trials, marketing, and production on their own, they will not have to share the revenues—which in Europe alone are estimated to be potentially up to two times the US numbers—nor the profits. While this may slow the process of expanding beyond the USA initially, in the long run it could mean the potential for Dendreon to grow—and the resources they have to develop new products—is significantly greater.
Speaking of which, the company is expected to use the Provenge revenue steam—which is expected to ramp up from $180M in the next 12 months to $1.2B-to-$2B annually for the USA alone—to fund development of immunotherapeutic treatments for other cancers such as breast, colon, ovarian, and others leveraging the biotech behind Provenge. And on the subject of revenue streams, another piece of news from the teleconference was the pricing: $93,000, which tops the estimates most analysts had been using. (We had been using $75,000 in our revenue models.) While this likely (barring insurance reimbursement issues) means more revenue for Dendreon, it does not necessarily mean greater profitability; that will depend on the costs of providing these unique treatments for each individual patient and it will be at least a year before we have a firm handle on those (and probably more like two years).
So…what’s next? Thanks to all the publicity and the willingness of more conservative investors to get aboard now that Provenge has been approved by the FDA, we could see some short term gains. However, with the prospect of an ROW marketing partnership deal—and the concomitant cash infusion that would have resulted—now off the table, there is not much immediate gratification to look forward to. We can expect the company to beef up their development effort both with respect to work on other cancers and to expand the label for Provenge (e.g., trials to use Provenge in concert with other therapies to treat earlier-stage prostate cancer patients which, if the results are good, will expand the potential market), but none of those developments will engender any immediate revenue. We can expect some progress on the ex-US approval trials front, but for the near term, this means more red ink, not black. And we can expect a gradual ramp up of patient treatments and revenues in the US (the company projects 2000 men will be treated in the first 12 months starting next week). Depending on market demand, they could be processing patients at an annual rate of up to 15,000 or so by mid-2012. But with a limited prospect for fireworks anytime soon—and the probability of some production teething problems which could make new investors jittery—we may not see a lot of share price appreciation between now and the end of the year.
Another consideration going forward is that sans the cash windfall and expenses sharing that would come along with an ROW partnership, Dendreon will have to fund the ex-US trials, marketing, and production for Provenge themselves. This is in addition to their R&D costs for developing new immunotherapy products. Higher-than-anticipated expenses combined with a hole where the ROW signing bonus cash was anticipated may necessitate a dilutive secondary offering. Of course, now that Provenge is approved, with interest rates low it may be possible for the company to borrow the cash they need on favorable terms, thus avoiding issuing more stock, but servicing debt would impinge on profitability, which would make the stock relatively less attractive.
If you purchased DNDN stock back on 14 Apr 09 when we recommended it, you now have a gain of nearly 200% in 54 weeks. You may want to sell a third of your position—taking a long-term capital gain at 2010’s advantageous rate—to get back your initial investment and then let the rest ride “for free.” This is an alternative requiring particularly serious consideration if your DNDN position has grown to be more than 30% or so of your entire portfolio, as concentrating that much money in one company’s stock—regardless of how good the prospects are—is risky.
Having said that, for our part, we are holding onto every share here. We will be ready to pull the rip cord in the event of a market-wide meltdown (to which Dendreon would not be invulnerable), but short of that…good grief, we have a potential cure for cancer here, and the company retains the world-wide rights. How often does an investing opportunity like that come along?
The Power of Coke’s Durable Competitive Advantage
April 30th, 2010 | Posted by tipsIt was only after traveling across the heartland of America that I recognized the true value of a durable competitive advantage. On my way to the Berkshire Hathaway (NYSE:BRK.A) Annual Meeting, it was hard not to see a Coca-Cola (NYSE:KO) distribution truck every time you scanned the road’s horizon. After witnessing this firsthand, I wanted to immediately buy the stock as KO obviously benefitted from supreme economies of scale. Most investors flock to what seems to be the next high growth company, such as Amazon (NASDAQ: AMZN) or Apple (NASDAQ: APPL). However, these companies operate in a highly competitive industry where market share can be easily gained or lost. Coke’s biggest competitor is Pepsi (NYSE: PEP) and after a closer look, it seems more like friendly competition than a fierce fight for market share. Perhaps you need to look no further than Coke for the next high growth stock.
Franchise value, economies of scale, and durable competitive advantage all essentially translate to the same thing, which is operating with a wide economic moat to ward off competitors. Warren Buffett, an owner of Coke common stock, likes to invest in companies that operate with a wide and ever-expanding economic moat that makes it impossible for competitors to gain valuable market share and industry growth.
A quick look at the energy drink market further illuminates Coke’s supreme economies of scale. Within a relatively short period of time after the dawn of energy drinks, Coke immediately developed Full Throttle to directly compete and gain market share. In fact, you could also say that Coke relatively controls product innovation and development in the soft drink industry.
Consequently, Coke may be one of the best examples of companies operating with a durable competitive advantage. Coke’s distribution ability, superior management, and excellent product innovation truly make the company a “business castle” with a wide “economic moat” that not even the bravest army would dare attack or attempt to swim across. After all, you can’t swim across a never ending moat.
Travelers: Value Stock Where Catalyst Is Already Visible
April 30th, 2010 | Posted by tipsTravelers (TRV) is a value stock where the catalyst is already visible. At a recent price of 51.42 it trades at TTM P/E of 7.9 and a P/B of .96. Earnings of 1.25 for 1Q 10 met guidance, in spite of heavy weather related catastrophe claims.
The company says they may come out of the recession with more business customers than they had at the onset. Premium to surplus stands at about one to one, and there is 3 billion of capital in the holding company, much of it available to fund share repurchases at favorable prices. As business customers experience recovery, increased written premiums will be forthcoming. The earnings conference call was upbeat on these and other issues.
Overview – from the 10-K:
The Travelers Companies, Inc. (together with its consolidated subsidiaries, the Company) is a holding company principally engaged, through its subsidiaries, in providing a wide range of commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals. The Company is incorporated as a general business corporation under the laws of the state of Minnesota and is one of the oldest insurance organizations in the United States, dating back to 1853.
Financial Strength – from the earnings conference call transcript:
Michael Nannizzi (analyst)
…And just one last question if I could on leverage, how important is operating near that one to one premium to surplus. Is that a target or is that more just a result of other things that you are doing thanks.
Jay Fishman, CEO
It’s absolutely the result. What I have indicated before is that we have the various rating agency models that we apply along with risk based capital, and whether it’s the CAR ratio or the S&P or Moody’s model or Fitch models, we evaluate what the operating company capital requirements should be for a strong double A company as we are.
From that, we then look at the leverage of the holding company the holding company cash to come up with the actual capital position, and the fact that premium to surplus is approximately one to one. It’s not something we look at; it is absolutely the result of that process.
Business Insurance, Recession and Recovery – from the conference call:
One of the other interesting thoughts here as you look at our data, and probably broadly across much of our business, but certainly in the business insurance side we are growing our customer base it’s hard to see in the premium, because our typical and I am not just talking about writing a whole bunch of small ones so the number are larger.
We are in the aggregate growing our customer base. The premium is struggling because our typical customer might need a less insurance than they do in normally robust times, and that typically comes through on the AP side, audit premium side. So it’s an important note though that we feel good about this grow.
Many business insurance policies are subject to audit. The policy is written with an estimated premium base, typically sales or payroll. After it expires, it is audited and the premium is adjusted accordingly. The subsequent policy, which will have been issued before the audit, is frequently adjusted if the audit suggests estimated payroll or sales were out of line.
During a recession, audits come in below estimates and premiums are refunded. Some polices are endorsed to reduce estimates in accordance with the audits. As the recession ends, audits create additional premiums, which are fully earned. In addition, estimates for current policies are increased. This process gives Travelers some built-in premium increases as the recovery filters through the audit process. That will take a couple of years to play out.
Buybacks – During 2009 the company repurchased 69.4 million shares at a total cost of 3.3 billion, or 47.55 per share. That is less than the current price, and less than the current book value, whether GAAP or adjusted. Given the financial strength demonstrated by the one to one premium to surplus ratio, the buybacks make good sense as a way to enhance shareholder value.
During 2010 the company expects to devote 3.5 to 4 billion to share repurchases.
Value Creation – Checking tangible book value per share, it has increased 18.1% annually for the past 5 years – a trying time for insurance company investment results. This type of performance, which demonstrates management’s ability to accumulate quantifiable value for shareholders, is frequently a sign of long-term value. Trading at a P/B of 1, if book value goes up 10%, the share price should do the same. If the multiple expands, share prices can increase rapidly.
Valuation – Using 4 years trailing earnings plus guidance for 2010, 5 year average EPS works out to 5.39 per share. Applying a historical midpoint multiple of 14, I arrive at a target of 75. Using a historical midpoint P/B of 1.4, I get 53.50 X 1.4 = 75. Allowing two years for the catalysts discussed in this article to take effect, the return would be 20% annualized, to which one could add a dividend of 2.82%.
Strategy – Shares are optionable, to include LEAPS, with implied volatility standing at 23.8%. Beta at .7 portrays a slow moving stock. Book value of 53.50 (or nonGAAP adjusted book value of 49.60) provides margin of security. The stock is suitable for dividend (2.82%) or buy and hold investors.
I see no reason to be fussy about an entry point – today’s price is attractive.
Options – The use of LEAPS as a substitute for share ownership might be considered. The Jan 2012 40 call carries a very affordable time premium, provides considerable leverage, and permits the investor to wait patiently for a price move, without tying up a lot of funds. Some out of the money calls could be sold, for example the Oct 2010 55, in order to fund the time premium for the LEAPS and pick up some income if the stock takes a while to make a move.
Expecting a 20% return based on the stock reverting to its mean valuation multiples, the application of leverage could provide substantial benefits.
Insurance Sector Negatives – Insurance companies are well represented in my portfolio, and I have previously written favorable but hopefully balanced articles on Allstate (ALL), Chubb (CB), MetLife (MET), Prudential (PRU) and MBIA (MBI). I am pleased with my investment results on these companies.
MBIA is a financial guarantor and a separate case, but the rest of the companies mentioned are exposed to one or more of various issues, such as but not limited to investments in RMBS, CMBS, and CRE; exposure to catastrophes of various types; exposure to fluctuations in the equity markets; intense and cyclical competition; commodity-like products; new hazards or loss exposures such as asbestos or environmental liability; increased societal litigiousness; hyper-vigilant state regulation; prospective Federal regulation; popularity as subjects of the game of political football; etc. Gloria Vogel has written a couple of articles raising these or similar issues.
My experience going back to 1969 when I got my first job in insurance is that the issues mentioned are recurrent; the companies have learned how to deal with these and analogous problems; and the better run among them find ways to make money.
From time to time insurance companies become unpopular as investments. If they are trading at a discount to metrics which take into account the cyclical nature of the business, there is every reason to buy them and wait for better days. That has been working last year and this, and it still has a way to go.
For LaBarge, Diversification Is Key to Success
April 30th, 2010 | Posted by tips
Company Description: LaBarge, Inc. (LB) provides custom electronic, electromechanical and interconnect systems on a contract basis for customers in diverse technology-driven markets.
Current Data, 4/29/2010:
Reasons for Optimism
LB Meets 8 Out of 10 GeoInvesting’s Bargain Requirements:
| Requirement | Comments | |||
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Recent 52-week High (generally within 3 months) | Reached $13.21 on 4/10/2010 | ||
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30% EPS Growth Rate |
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10% Revenue Growth |
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Positive Operating Cash Flow & Strong Balance Sheet | As of December 2009 | ||
| YES | Positive Cash Flow |
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| NO | Debt to Equity Ratio less than 20% | 24.9% | ||
| YES | Current Ratio is at least 2:1 | 2.1:1 | ||
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Return on Equity is at least 15% | 15.0% (On Annualized Basis) | ||
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Minimum Pre-tax Operating Margins of 8% | 5.0% as of fiscal 3rd Qtr. 2010 | ||
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Preferably Under 50 Million Shares | 16.0 Million shares as of fiscal 3rd Qtr. 2010 | ||
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High Insider Ownership (generally greater than 15%) | 22.9% as of 10/31/09 proxy | ||
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Limited Institutional Ownership (generally less than 20%) | 26% | ||
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P/E Divided by Growth Rate (PEG Ratio) is Less Than 1. (based on 2010 est) | 0.50 |
Strong Order Trends: Mr. LaBarge says:
Due to broad-based strengthening in customer demand, bookings of new business in the fiscal 2010 third quarter increased 50 percent from the comparable period a year earlier and 14 percent from the current-year second quarter.
Higher bookings resulted in backlog at March 28, 2010, increasing to $194,350,000, up 8 percent from $180,528,000 at December 27, 2009, and up 16 percent from $168,008,000 at June 28, 2009. Backlog at March 29, 2009, was $185,602,000.
Strong Commentary:
Mr. LaBarge said:
We remain very pleased with LaBarge’s excellent progress and expect the fiscal fourth quarter, ending June 27, 2010, to be the strongest quarter of the fiscal year with sales and earnings moderately higher than this year’s third-quarter levels. Based on our current visibility and the anticipated continued strengthening of order flow across key market sectors, particularly industrial and natural resources, we expect continued business strength into next fiscal year, with sales and earnings for the 2011 full fiscal year expected to reach new record levels.
Diversification: Through tough economic times, the company can rely upon its diversity, essentially allowing its stronger business segments to make up for those whose revenues get more compromised for one reason or another.
(Click to enlarge)
From the 2009 Annual Report:
The wisdom of this approach was validated during fiscal 2009 when a strong defense market helped offset weak sales to the natural resources and industrial industries.
Another leg of diversification in the company’s recent Pensar acquisition will help to facilitate gaining a presence in the wind power generation market.
Growth and Value. The stock sells at less than two times its book value per share of $6.76
Potential Valuation Scenarios if the company can achieve its EPS growth goals:
Short-Term Potential value based on fully taxed adjusted trailing EPS
P/E 25 * $0.81 = $20.25
Short-term Potential value based on 2009 fully taxed adjusted Implied EPS Guidance
P/E 15 * $1.15 = $17.40
Tim Cook, COO of Apple:
We had some staggering growth rates, as you mentioned. If you look at Asia-Pacific as an example, the iPhone units in Asia-Pacific grew 474% y-over-y. Japan grew 183. Europe grew 133. And so these are some fabulous numbers we’re seeing, just incredible demand for iPhone….
China has been interesting. If you look at greater China, which we define as mainland China, Hong Kong, and Taiwan, the iPhone units were up y-over-y over nine times, and we added another 800 points of distribution in China. The revenue also – we’ve never released this number before but I’ll do this in this particular case – is through H1 the FY that we just completed, so the six-month period, our revenue from greater China was almost 1.3B, and this is up over 200% y-over-y. And so we’re real pleased with how the company’s positioned to take advantage of the growth in greater China….
We’re very excited about China, not only for retail but for Apple. And Tim talked about successes that we’ve had in greater China to date with revenue being up about two times y-over-y. But as regards to retail stores, we will open two stores in Shanghai this summer, and we target having about 25 stores open in China by the end of calendar 2011….
In America we are so used to debt, Asian electronics, and Importing, but Apple is the exact opposite. Apple has a strong cash balance sheet, Asian customers want to buy North American electronics, and Apple is exporting with over 50% of Revenues coming from abroad. People around the world like Apple’s superior products. Apple is what China wants and what America needs.
How Often Should Stock Pay and Raise Dividends?
April 30th, 2010 | Posted by tipsIn the US and Canada, most companies pay dividends quarterly. In other parts of the world, it is not uncommon for companies to pay an annual or a semi-annual dividend. That is not to say that North American companies sometimes choose not to pay quarterly dividends. For many years McDonald’s (MCD) paid an annual dividend. Since 2000, Walt Disney Co. (DIS) has paid an annual dividend and Ruby Tuesday, Inc. (RT) pays a semi-annual dividend. Going in the other direction, Realty Income Corp. (O) and Alpine Total Dynamic Dividend Fund (AOD) pay monthly dividends.
Though I prefer quarterly dividends, there is something more important than frequency — dividend increases. Below are several companies satisfying their shareholders desire for more cash by increasing their dividends:
Travelers (TRV) is a leading provider of commercial property-liability and homeowners and auto insurance. April 23rd the company increased its quarterly dividend to $0.36/share. The dividend is payable June 30, 2010, to shareholders of record as of the close of business June 10, 2010. The ex-dividend date is June 8, 2010. The yield based on the new payout is 2.85%.
Costco Wholesale (COST) operates about 565 membership warehouses in the U.S., Puerto Rico, Canada, the UK, Taiwan, Japan, Korea, and Mexico. April 23rd the company raised its quarterly dividend 14% to $0.205/share. The dividend of $.205 per share is payable May 21, 2010, to shareholders of record at the close of business on May 7, 2010. The ex-dividend date is May 5, 2010. The yield based on the new payout is 1.39%.
Holly Energy Partners (HEP) operates refined product pipeline and terminal facilities. April 23rd the partnership raised its quarterly distribution to $0.815/unit. The distribution will be paid May 14, 2010, to unitholders of record May 4, 2010. The ex-distribution date is April 30, 2010. The yield based on the new payout is 6.98%.
International Paper (IP) is a leading worldwide producer and distributor of printing papers and packaging products. On April 26th the company increased its quarterly dividend to $0.125/share. The dividend is payable June 15, 2010 to shareholders of record on May 17, 2010. The ex-dividend date is May 13, 2010. The yield based on the new payout is 1.85%.
Alliance Holdings GP, L.P. (AHGP) produces and markets coal primarily to utilities and industrial users in the U.S. It offers a range of steam coal with varying sulfur and heat contents. April 26th the partnership increased its quarterly distribution 2.8% to $0.465/unit. The distribution is payable on May 20, 2010, to AHGP’s unitholders of record as of the close of trading on May 13, 2010. The ex-dividend date is May 13, 2010. The yield based on the new payout is 5.49%.
Community Bank System (CBU) provides financial services in upstate New York, and in northeastern Pennsylvania as First Liberty Bank & Trust. April 26th the company raised its quarterly dividend 9.1% to $0.24/share. The dividend is payable on July 9, 2010, to shareholders of record as of June 15, 2010. The ex-dividend date is June 11, 2010. CBU is a Dividend Achiever and has paid a higher dividend for 17 consecutive years. The yield based on the new payout is 3.89%.
Inergy Holdings (NRGP) operates a retail and wholesale propane supply, marketing and distribution business. April 26th the company increases its quarterly distribution 3.7% to $0.975/unit. The distribution will be paid on May 14, 2010, to unitholders of record as of May 7, 2010. The ex distribution date is May 5, 2010. The yield based on the new payout is 5.31%.
EarthLink (ELNK) is one of the largest US Internet service providers, based on paying subscribers. April 27th the company increases it quarterly dividend to $0.16/share. This increase will be reflected in the next quarterly dividend to be paid on June 28, 2010, to shareholders of record on June 14, 2010. The ex-dividend date is June 12, 2010. The yield based on the new payout is 6.88%.
Williams Partners (WPZ) engages in gathering, transporting, processing, and treating natural gas, as well as fractionating and storing natural gas liquids. April 27th the company increases its quarterly distribution 3.5% to $0.66/unit. The distribution is payable on May 14, 2010, to unit holders of record at the close of business on May 7, 2010. The yield based on the new payout is 6.31%.
IBM (IBM) products and services include information technology services, software, computer hardware equipment, fundamental research, and related financing. April 27th the company raised its quarterly dividend 18% to $0.65/share. The dividend is payable June 10, 2010, to stockholders of record May 10, 2010. The ex-dividend date is May 6, 2010. This is the 15th year in a row that IBM has increased its quarterly cash dividend, and 7th year in a row of double-digit percent increases. With the payment of the June 10th dividend, this Dividend Achiever will have paid consecutive quarterly dividends every year since 1916. The yield based on the new payout is 2.02%.
Sunoco Logistics Partners LP (SXL) owns and operates a group of refined product and crude oil pipelines and terminal facilities. April 27th the company increases its quarterly distribution 2.3% to $1.11/unit. The yield based on the new payout is 6.54%.
WW Grainger (GWW) is the largest global distributor of industrial and commercial supplies such as hand tools, electric motors, light bulbs and janitorial items. April 28th the company raised its quarterly dividend 17% to $0.54/share. April 28th the company raised its quarterly dividend 17% to $0.54/share. The dividend is payable on June 1 to shareholders of record on May 10. The ex-dividend date is May 6. GWW is a Dividend Aristocrat and has paid a higher dividend for 39 consecutive years. The yield based on the new payout is 1.99%.
Exxon (XOM) is the world’s largest publicly owned integrated oil company. April 28th the company raised its quarterly dividend 4.8% to $0.44/share. The dividend is payable on June 10, 2010, to shareholders of record of Common Stock at the close of business on May 13, 2010. XOM is a Dividend Aristocrat and has paid a higher dividend for 28 consecutive years. The yield based on the new payout is 2.54%.
Chevron (CVX) is a global integrated oil company that has interests in exploration, production, refining and marketing, and petrochemicals. April 28th the company increased its quarterly dividend 5.9% to $0.72/share. The dividend is payable June 10, 2010, to holders of common stock as shown on the transfer records of the Corporation at the close of business on May 19, 2010. The ex-dividend date is May 17. The amount represents a 5.9 percent increase in the company’s quarterly dividend. CVX is a Dividend Achiever and has paid a higher dividend for 23 consecutive years. The yield based on the new payout is 3.37%.
Sturm, Ruger & Co. (RGR) designs, manufactures, and sells firearms to domestic customers; it offers products in four industry product categories: rifles, shotguns, pistols, and revolvers. April 28th the company raised its quarterly dividend 55% to $0.093/share. The dividend will be paid on May 28, 2010, to stockholders of record as of May 14, 2010. The ex-dividend date is May 12, 2010. The yield based on the new payout is 2.16%.
TransAlta Corp. (TAC) is an independent power producer and wholesale marketing company owns a portfolio of generation assets in Canada, the United States, Mexico, and Australia. April 29th the company increased its quarterly dividend to $0.29/share. The dividend is payable July 1, 2010, to shareholders of record at the close of business June 1, 2010. The ex-dividend date is May 28, 2010. The yield based on the new payout is 5.59%.
Cullen/Frost Bankers (CFR) is the largest multi-bank holding company headquartered in Texas, has more than 80 offices in various cities in the state. April 29th the company increases its quarterly dividend 4.7% to $0.45/share. The dividend is payable June 15, 2010, to shareholders of record on June 1, 2010. The ex-dividend date is May 28, 2010. CFR is a Dividend Achiever and has paid a higher dividend for 16 consecutive years. The yield based on the new payout is 3.02%.
Duff & Phelps (DUF) is an independent financial advisory company operates worldwide in two segments, Financial Advisory and Investment Banking. April 29th the company raised its quarterly dividend by 20% to $0.06/share. The yield based on the new payout is 1.50%.
Frequency of dividends increases is one of the most important things to consider when adopting a dividend growth investment strategy.
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