Ironically, in the current market environment where dividend cuts are announced daily, there are probably more articles than ever being written reminding investors that some companies are still raising their dividends. One such recent article, at Rising Dividend Investing, offers a list of eight companies that have hiked their dividends.
Here’s my quick take on these eight dividend stocks (the stars represent Dividendinvestor.com’s star ranking system – three stars are five years of consecutive dividend increases, four stars are ten, and five stars are 20):
Abbott Laboratories [[ABT]] (*****) – This healthcare products maker recently increased its quarterly dividend by 11% to $0.40 per share. Its stock has spent years trading well above its long-term linear regression trendline, which is currently located about $10 below the stock’s current trading price of about $46. This suggests the possibility of above-average downside risk. Valuation analysis results for ABT here range from about fairly valued to overvalued. I’m staying away for now.
Chubb [[CB]] (*****) – This property/casualty insurer recently raised its quarterly dividend by 6.1% to $0.35 from $0.33 per share. The stock appears to be fairly valued to undervalued by some measures, and overvalued by others. At its current price of about $35 per share, CB is trading a bit below its long-term linear regression trendline after having traded above it for several years. An equal move below the long-term uptrend line would bring the stock down into the mid $20s. I would definitely be interested in it at those levels.
The Coca Cola Co. [[KO]] (*****) – Coca Cola Co. recently raised its quarterly dividend by 8%, to 41 cents from $0.38 per share. Trading at about $38 and yielding 4.3%, the shares of this soft drinks company appear fairly valued to slightly undervalued. A retest of the stock’s ’03 lows would bring the share price down to the mid to low $30s, at which point I might become more interested.
Colgate-Palmolive [[CL]] (*****) – This maker of personal consumer products recently announced a 10% increase in its quarterly dividend to $0.44 per share, but that doesn’t necessarily make the stock a good buy. In fact it appears overvalued here at about $56 per share. That said, the company has a fine dividend growth record and I’d start seriously looking to buy the stock if it dropped into the low $40s or below.
FPL Group [[FPL]] (****) – This public utility recently raised its quarterly dividend from $0.4450 to $0.4725 per share. At a current share price of about $43, and a dividend yield of 4.4%, the stock appears somewhat overvalued based on fundamental valuation measures as well as its long-term historical price trend. If the stock were to drop to a level resulting in a more typical yield for a utility (about 6%), it would have to trade in the low $30s. Currently the $36 area appears to be a support level, and below that about $30. I might get interested if it were to trade below $30.
Kinder Morgan Energy Partners LP [[KMP]] (****) – This oil and gas pipeline master limited partnership (MLP) recently raised its quarterly distribution from $1.02 to $1.05 per unit (the equivalent of a share of stock), resulting in an annual yield of 9.8% at its current trading price of about $43. KMP appears somewhat overvalued here. A retest of its ’02 lows could mean a drop back into the low $30s. I’m currently short some puts against KMP at higher prices – a position I initiated last year before the market meltdown. In the current environment I would certainly wait for lower prices.
Praxair [[PX]] (****) – I’ve followed the stock of this industrial gases producer for some time waiting for an opportunity to buy it at a reasonable value. To make it more enticing, the company recently raised the quarterly dividend by 6.7%, from $0.375 to $0.400 per share. Unfortunately, trading at about $55 and yielding 2.9%, the shares appear at best about fairly valued, and by some measures significantly overvalued. I might start getting interested if the stock trades below $40. A retest of its lows earlier this decade would mean a move down to the $25 area.
Sysco [[SYY]] (*****) – This food distributor recently increased its quarterly stock dividend by 9% from $0.22 to $0.24 per share. The stock, now trading at about $20 and yielding 4.7%, appears fairly valued to slightly undervalued here. I’ll start to become very interested if it falls into the teens. Currently, the $20 level appears to offer support, and below that, $18.