NewMarket Just Raised Its Dividend 8.3%. Here Are 2 More Under-the-Radar Dividend Stocks
Three NYSE specialty companies raised their dividends within days of each other, and none of them made the usual headlines. One covers its payout nearly six times over with free cash flow, another just posted a 50% gain year to…
Dividend growth headlines usually go to the megacaps. Meanwhile, three specialty businesses on the NYSE raised their payouts within days of each other. Stepan Company (NYSE:SCL), NewMarket (NYSE:NEU | NEU Price Prediction) and Leidos (NYSE:LDOS) sell to manufacturers, refiners and government agencies. NewMarket led the group, raising its quarterly payout by 8.3%, according to StreetInsider. All three carry modest yields, and they offer income investors steady growth backed by profits that cover the payout several times over.
Stepan Company: A Specialty Chemical Payer That Raises Every Year
Stepan makes surfactants, the ingredients that help detergents, shampoos, and cleaners lift dirt and foam. It also makes polymers used in insulation foam and a smaller line of specialty products. Its board declared a quarterly dividend of $0.405 per share, up from $0.395. That works out to a raise of about 2.5%. At the latest price of $69.61, the new rate gives a forward yield of about 2.33%, which makes Stepan the top yielder of the three.
Dividend Safety Check
Third-quarter adjusted EPS came in at $0.94, ahead of the $0.725 consensus estimate. GAAP EPS was $0.78. The new quarterly dividend equals roughly 43% of that adjusted quarter, which is a comfortable ratio. Trailing GAAP EPS of $0.19 looks much worse, because restructuring charges connected to the company’s Project Catalyst program pulled it down. That is why the stock carries a forward P/E of about 19, a far more useful number than the trailing multiple.
The balance sheet holds $1.22 billion in shareholders’ equity and $98.1 million in cash. A $28.5 million land sale has closed, and the proceeds are going toward debt reduction. The dividend record shows regular payments going back to 1999. The quarterly rate rose from $0.16 to $0.17 in 2013 and has gone up every year since, reaching the current $0.405.
Why the Raises Can Continue
The business has momentum. Revenue reached $692.15 million, up 17.26% year over year. Adjusted EBITDA rose 18% to $66.3 million, and Surfactants adjusted EBITDA climbed 27%. Management expects full-year adjusted EBITDA growth, positive free cash flow, and further debt reduction. Investors have noted: the stock is up 50.2% year to date.
Risk to Watch
Cash conversion fell short. Free cash flow was only $8.2 million in the quarter, down 79.61%, as working capital absorbed cash. At the new rate, one quarter of dividends costs roughly $9.2 million, so free cash flow didn’t cover the dividend this quarter. Watch whether that promised positive free cash flow shows up in the fourth quarter.
NewMarket: Engine Additive Profits Funding Bigger Checks
NewMarket’s Afton Chemical and Ethyl units make the additives that help motor oils and fuels protect engines. A smaller Specialty Materials segment, which includes AMPAC, supplies propellant chemicals to aerospace and defense customers. According to StreetInsider, the new quarterly dividend is $3.25 per share, up from $3.00. At $784.13 per share, that comes to a forward yield of about 1.66%.
Dividend Safety Check
This is the best-covered payout in the group by earnings. The new annualized dividend uses about 26% of trailing EPS of $49.30. Third-quarter net income was $124.1 million, while dividends paid over the first nine months totaled $83.1 million. Net debt to EBITDA has dropped to 1.0x. The company also bought back $126.4 million of stock year-to-date, returning about $209.5 million to shareholders so far this year while still spending $88.5 million on capex.
The long-term record shows the quarterly rate climbing from $0.90 in 2013 to today’s $3.25, according to StreetInsider. Some years brought no increase, so the record reflects strong long-term growth with occasional pauses.
Why the Raises Can Continue
Specialty Materials revenue reached $62.01 million, nearly double the prior year, helped by the Calca Solutions acquisition and a better mix. New ammonium perchlorate and high-purity hydrazine capacity is due online by year-end, which gives the defense side more room to grow. Operating income rose 9.39% to $142.94 million. The shares trade at about 16 times trailing earnings and 23 times forward estimates.
Risk to Watch
The core additives business is shipping less product. Petroleum Additives revenue was flat at $650.95 million, with an 8% drop in shipments offset by surcharges. Surcharges can’t make up for falling volume forever. The market seems to share that concern: the stock fell 9.99% over the past week despite the raise.
Leidos: Two Raises in One Year From a Defense Tech Contractor
Leidos provides IT, engineering, and cyber services to the Pentagon, intelligence agencies, and civilian and health departments. According to TradingView, the company raised its quarterly dividend by 4.7% to $0.45 per share. It marks the second increase this year. The rate was $0.40 for every payment in 2025 and moved to $0.43 for this year’s earlier payments, so the new rate is 12.5% above last year’s. At $142.98, the forward yield is about 1.26%.
Dividend Safety Check
Leidos has the most room to keep raising. The annualized new dividend uses only about 17% of trailing EPS of $10.71. Second-quarter free cash flow was $761 million against $55 million in dividends paid, roughly 13.8 times coverage. Revenue visibility is strong too, with a backlog of $48.71 billion and a book-to-bill ratio of 1.1x. The quarterly rate has risen from $0.34 in 2020 to $0.45 today through a series of increases, according to TradingView.
Why the Raises Can Continue
Even after the recent bounce, the stock trades at about 11 times forward earnings. It is down 19.98% year to date and sits well below its 52-week high of $203.41. Contract wins keep coming: U.S. Cyber Command selected Leidos for a unified cyber planning platform, and the company is adding AI to a Pentagon logistics system. The shares have gained 17.36% over the past month, a sign sentiment is turning. Third-quarter results come this Tuesday.
Risk to Watch
Debt is the main concern. Borrowing rose to roughly $6.0 billion after the ENTRUST acquisition, raising interest costs. Leidos paid down $300 million in the second quarter, but a new 20 million share buyback authorization will compete for the same cash.
Quiet Raisers Worth a Spot on the Income Radar
Stepan, NewMarket and Leidos share one trait: each just raised its payout from a position of strength. NewMarket has the lowest earnings payout, Leidos has the most free cash flow behind each dollar of dividends, and Stepan has the most consistent record of annual raises. For income investors who care more about steady dividend growth than a big starting yield, these three names deserve a closer look (and if the goal is a payout ladder you never have to sell shares to fund, we laid out how to build one in a free guide: here).
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
