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12 Industrial Strength Dividend Stocks *

D4L — Wed, 16 Feb 2011 07:30:13 +0000

This is the third installment in a multi-part series that looks at different sectors that have traditionally been very friendly to dividend investors. Each of these sectors have attributes that make the companies in them potentially desirable to long-term buy-and-hold dividend growth investors. Understanding these attributes will hopefully help us to select the very best companies for our income portfolios. Last week we looked at Financial Services Sector. This week we are looking at Industrial Materials…

Industrial Materials Attributes

The Industrial Materials Sector consists of companies that manufacture products or otherwise harvest a product, such as a mining company. The products are most often inputs or raw materials into another manufacturing process, such as steel producer. Many of these companies are often referred to as members of the “smokestack industry” and are classified as cyclical stocks – a stock that rises and falls in step with the economy.

Timing is important when buying an industrial stock. If you buy when business is booming you will likely pay too much, which means a very low yield. Most stocks in this sector are currently overpriced. The average yield on Industrial Sector stocks that I follow is only 1.7%. This includes only 3 stocks yielding in the 3% range., with all the others sub-3%. Several of these sub-3% companies were yielding in excess of 4% in 2008 when the world looked bleak for Industrial stocks.

Industrial Materials Companies

Below are several leading Industrial Materials companies that I follow. The companies selected have a dividend yield of 2.00%, or higher, and have raised their dividends for at least 15 years.

RPM International Inc. (RPM)
Yield: 3.5% | Growth:2.5 % | Years: 38
RPM International Inc. makes specialty coatings and products for the structural waterproofing and corrosion control markets, as well as products for the consumer, do-it-yourself, and hobby markets.

MDU Resources Group Inc. (MDU)
Yield: 3.0% | Growth: 1.9% | Years: 20
MDU Resources Group Inc. is involved in electric and natural gas distribution, natural gas storage, gathering and transmission, construction materials and mining, and oil and natural gas production.

Nucor Corporation (NUE)
Yield: 3.0% | Growth: 0.8% | Years: 37
Nucor Corporation is the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas.

PPG Industries, Inc. (PPG)
Yield: 2.5% | Growth: 1.9% | Years: 37
PPG is a leading manufacturer of coatings and resins, flat and fiber glass, and industrial and specialty chemicals.

Illinois Tool Works Inc. (ITW)
Yield: 2.3% | Growth: 4.8% | Years: 47
Illinois Tool Works Inc. is a diversified manufacturer that operates a portfolio of about 840 industrial and consumer businesses throughout the world.

3M Company (MMM)
Yield: 2.3% | Growth: 2.5% | Years: 52
3M Co. provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives, and other chemical additives.

Harsco Corporation (HSC)
Yield: 2.3% | Growth: 1.9% | Years: 20
Harsco Corp. is a global industrial service provider and manufacturer has operations in steel mill services and access services, as well as construction.

Emerson Electric Co. (EMR)
Yield: 2.2% | Growth: 2.2% | Years: 55
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world.

Air Products And Chemicals Inc. (APD)
Yield: 2.2% | Growth: 2.1% | Years: 29
Air Products and Chemicals Inc. is a major producer of industrial gases and electronics and specialty chemicals and also has interests in environmental and energy-related businesses.

General Dynamics (GD)
Yield: 2.1% | Growth: 10.1% | Years: 19
General Dynamics is the world’s fifth largest military contractor and also one of the world’s biggest makers of corporate jets.

United Technologies Corp. (UTX)
Yield: 2.0% | Growth: 10.4% | Years: 18
United Technologies Corp. portfolio includes Pratt & Whitney jet engines, Sikorsky helicopters, Otis elevators and Carrier air conditioners, among other products.

Pentair, Inc. (PNR)
Yield: 2.0% | Growth: 5.6% | Years: 34
Pentair Inc. makes and markets water and fluid control devices, and electrical and electronic enclosures.

Conclusion

The Industrial Materials Sector is the largest sector in my database of dividend stocks. Of the 198 stocks that I track, it currently is represented by 34 stocks (17%). As noted above, this is not a sector I am in a position to buy often, but when the time is right, I plan on taking full advantage of the opportunity. Two of my largest annualized returns (IRR) come from industrial stocks: 3M (MMM) at 46.5% and Emerson Electric Co. (EMR) at 49.7%. I wouldn’t buy them at their current valuation, but based on where they were when I purchased them, I am enjoying a healthy yield-on-cost.

Full Disclosure: Long NUE, ITW, MMM, EMR, GD, UTX. See a list of all my income holdings here.

(Photo Credit)

11 Dividend Stocks Increasing Dividends and Long-Term Returns *

D4L — Fri, 20 Nov 2009 10:30:30 +0000

It is a well-documented fact that a significant portion of the historical equity returns are a result of reinvested dividends. In Triumph of the Optimists: 101 Years of Global Investment Returns (2002), the authors looked at equity returns from capital gains and dividends from 1900 to 2000. They determined that performance in any given year was driven by capital appreciation, but long-term returns were largely the result of reinvested dividends.

Here are several companies looking to increase their long-term returns by raising their cash dividends:

Intel (INTC) is the world’s largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products. November 16th, the company raised its quarterly dividend 12.5% to $0.1575/share. Paul Otellini, Intel president and CEO commented “With one of the highest dividend yields in the technology industry, the dividend increase is another sign of our confidence in business prospects going forward.” The yield based on the new payout is 3.26%.

Lancaster Colony (LANC) manufactures and markets consumer products in two segments: Specialty Foods, and Glassware and Candles. November 16th the company increased its dividend 5.3% to $0.30/share. The payable is payable December 31, 2009 to shareholders of record on December 10, 2009. The ex-dividend date is December 8. LANC is a Dividend Achiever and has increased its dividend for 47 consecutive years. The yield based on the new payout is 2.41%.

Brown-Forman (BF.A) on November 16 raised its dividend 4.3% to $0.30/share. Stockholders of record on December 7, 2009 will receive the cash dividend on January 4, 2010. This is Brown-Forman’s 64th consecutive year of quarterly dividends and the 26th consecutive year it has increased the annual dividend. The yield based on the new payout is 2.23%.

Sysco (SYY) is the largest U.S. marketer and distributor of foodservice products. November 17th the company boosted its dividend to $0.25/share. The dividend is payable on January 22, 2010, to common shareholders of record at the close of business on December 31, 2009. The ex-dividend date is December 29, 2009. LANC is a Dividend Achiever and has increased its dividend for 39 consecutive years. The yield based on the new payout is 3.66%.

Royal Gold (RGLD) is the largest U.S.-based company engaged in the acquisition and management of precious metal royalty interests. November 18th the company increased its quarterly dividend 13% to $0.09/share. The dividend is payable January 15, 2010, to shareholders of record at the close of business on January 4, 2010. The ex-dividend date is December 31, 2009. The yield based on the new payout is 0.68%.

PennantPark (PNNT) specializes in direct and mezzanine investments in middle-market companies. November 18th the company raised its quarterly dividend 4.2% to $0.25/share.The dividend is payable on January 4, 2010 to stockholders of record as of December 24, 2009. The ex-dividend date is December 22. The yield based on the new payout is 11.96%.

Harsco (HSC) is a industrial service provider and manufacturer has operations in steel
mill services and access services, as well as construction. November 19th the company boosted it quarterly dividend for the 16th consecutive year to $0.205/share. The dividend is payable February 16, 2010 to Harsco stockholders of record as of January 15, 2010. The ex-dividend date is January 13. The dividend yield on the new payout is 2.5%. LANC is a Dividend Achiever and has increased its dividend for 19 consecutive years. The yield based on the new payout is 2.52%.

NSTAR (NST) was created through the 1999 merger of BEC Energy and Commonwealth Energy System. November 19th the company increased its quarterly dividend 6.7% to $0.40/share.The payable February 1, 2010 to shareholders of record as of January 8, 2010. The ex-dividend date is January 6. The yield based on the new payout is 4.98%.

Laclede Group (LG) distributes natural gas on a retail basis in St. Louis and nearby suburban areas. November 19th the company raised its quarterly dividend to $0.395/share. The dividend will be payable on January 4, 2010, to shareholders of record on December 11, 2009. The ex-dividend date is December 9, 2009. Yield on the dividend is 5%. The yield based on the new payout is 5.00%.

Bob Evans Farms (BOBE) owned and operated 571 Bob Evans Restaurants & 132 Mimi’s Cafes. November 19th the company announced a 12.5% increase in the quarterly cash dividend to $0.18/share. The dividend is payable on Dec. 15 to stockholders of record at the close of business on Dec. 4. The yield based on the new payout is 2.83%.

Nike (NKE) is the world’s leading designer and marketer of high-quality athletic
footwear, athletic apparel, and accessories. November 19th, the company increased its quarterly dividend 8% to $0.27/share. The dividend is payable on January 4, 2010 to shareholders of record at the close of business on December 7, 2009. The yield based on the new payout is 1.70%.

When looking for stocks with growing dividends, longevity of consecutive increases is important. For a list of stocks with a long string of consecutive dividend increases, see this list.

Full Disclosure: Long INTC, SYY. See a list of all my income holdings here.

(Photo Credit)

10 Companies Increasing Dividends and Long-Term Returns *

D4L — Fri, 12 Dec 2008 11:30:00 +0000

It is well-documented that a significant portion of the historical equity returns are a result of reinvested dividends. In Triumph of the Optimists: 101 Years of Global Investment Returns (2002), the authors looked at equity returns from capital gains and dividends from 1900 to 2000. They determined that performance in any given year was driven by capital appreciation, but long-term returns were largely the result of reinvested dividends.

Here are 10 companies looking to increase their long-term returns by raising their cash dividends:

Interactive Data (IDC) Raises Qtr. Dividend 33% to $0.20/Share (3.48%)
Graco (GGG) Boosts Qtr. Dividend by 3% to $0.19/Share (3.50%)
Hillenbrand (HI) Raises Qtr. Dividend 1.4% to $0.185/Share (4.51%)
Triangle Capital Corporation (TCAP) Increases Dividend 33.3% To $0.40 Per Share (15.46%)
Nucor (NUE) Raises Qtr. Dividend by 9.4% to $0.35/Share (3.14%)
Progress Energy (PGN) Boosts Qtr. Dividend to $0.62/Share (6.20%)
DPL Inc. (DPL) Raises Qtr. Dividend by 3.6% to $0.285/Share (5.49%)
Valspar (VAL) Boosts Dividend from $0.14 to $0.15/Share
Erie Indemnity (ERIE) Raises Qtr. Dividends 2.3% (4.72)
Harsco (HSC) Raises Qtr. Dividend by 2.6% to $0.20/Share (3.20%)

NUE was reviewed on 9/1/2008 with a 5 Star-Buy rating. After running the remaining companies through my D4L-PreScreen.xls model, the Dividend Achiever PGN with a NPV of MMA Differential of $4,626 is one that I own and have on my watch list. None of the other companies’ NPV of MMA Differentials were close enough to warrant a more complete evaluation.

Disclosure: Long NUE and PGN.

(Photo: Steve Woods)