Investing
20 Bold Companies Raising Dividends Right Into the Recession
May 8, 2020 7:32 am
Costco Wholesale Corp. (NASDAQ: COST) confirmed on April 15 that its sales boosts were strong as customers continue to buy in bulk for their homes as a COVID-19 winner. Costco’s board approved a quarterly increase to $0.70 per share from $0.65, with an annualized payout of $2.80 per share. Due to Costco trading at a premium against peers on earnings with higher price-to-earnings valuations, and due to how much the stock has risen, this is currently only a 0.9% dividend yield.
Delek Logistics Partners L.P. (NYSE: DKL) announced on April 21, 2020, that it was raising its quarterly cash distribution to $0.89 per common unit. This was only a 0.6% hike and took the distribution to $3.56 per unit on an annualized basis. While a small hike, not many players, even in master limited partnerships (MLPs) are raising payouts in the energy sector these days. The MLP also announced that it was reiterating its expectation to raise its distribution in 2020 by 5% over 2019 levels. Not all this is an income distribution as is customary with MLPs, but that is close to a 19% yield equivalent basis, when comparing MLP distributions to traditional dividends.
International Business Machines Corp. (NYSE: IBM) announced a dividend hike of one cent per share on April 28, 2020. While that may sound unimpressive, the yield is close to 5.2%, and this marked the 25h straight year that IBM has hiked its dividend and more than 100 years of continuous dividend payments. IBM’s long-term investors may not even have known that there had been a raging bull market, and now they have to hope that the Red Hat buyout and its strategic imperatives can lead to higher cash flows on top of debt reduction in the years ahead.
Kinder Morgan Inc. (NYSE: KMI) announced on April 22 that it was committed to raising its dividend, although this was less than what had been previously communicated to shareholders. The new quarterly cash dividend of $0.2625 per share comes to a payout of $1.05 per share annualized, and it was a 5% dividend hike. Shareholders had expected the dividend to go up to $1.25 per share annually, but the company signaled that it was prudent to make less of an increase, considering the state of the energy business and the economy. Kinder Morgan also posted a quarterly net loss after $950 million in noncash impairments of assets and goodwill. Its current yield based on the new payout is close to 7.0%.
MetLife Inc. (NYSE: MET) announced on April 28 that the insurance giant was raising its dividend to $0.46 per common share from a prior $0.44 payout, a hike of 4.5%. MetLife shares have recovered handily from the March lows, but the insurance stocks are still way down from their highs due to the low interest rate environment and fears of underlying bond defaults. MetLife shares were still down 34% from their peak when the dividend hike was announced. Its new yield will be about 5.3%.
Nasdaq Inc. (NASDAQ: NDAQ) announced on April 22 that it was raising its common share dividend by 4% to $0.49 per share. It looks like higher trading volumes are helping to bolster the exchanges. Nasdaq’s $1.96 annualized payout is roughly a 1.75% dividend yield, and it is not quite 40% of its trailing normalized earnings.
Newmont Corp. (NYSE: NEM) is the top gold player in the world, and gold has been hot while many assets classes in 2020 have not. The company announced a new quarterly dividend payment of $0.25 per common share on April 21, 2020, and that is an increase of 79% from the prior $0.14 per share quarterly dividend. Newmont was among the first of the larger gold companies to start paying a dividend, long before its Goldcorp merger, and it has said in the past that its dividends would be tied to gold price bands. Imagine if that analyst making a $3,000 gold price call gets it right.
NextEra Energy Partners L.P. (NYSE: NEP) announced on April 22 that it raised its quarterly distribution per unit to $0.555 from $0.535. This generates a yield equivalent of 4.45% for the manager of managed contracted clean energy and renewable energy projects, along with a natural gas pipeline. The partnership had announced back in January that it was looking to raise its distribution by 12% to 15% annually through at least 2024, but with April earnings it signaled it could meet long-term, distribution goals without acquisitions until 2022.
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