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Stocks Increasing Quarterly Dividends

Here is the latest list of companies increasing their quarterly dividends that are rated as bullish or better by a consensus group of analysts through the equity summary score.

AmTrust Financial Services, Inc. (AFSI) announced that its Board of Directors approved an 11.1% increase in the common stock quarterly cash dividend, raising it from $0.09 to $0.10 per share of common stock. The dividend will be payable on July 16, 2012 to shareholders of record as of July 2, 2012. AFSI has a dividend yield of 1.43%.  AFSI has an equity summary score of 9.7 out of 10 for a VERY Bullish outlook.

VSE Corporation (VSEC) reported that the Company’s Board of Directors has declared a quarterly dividend of $0.08 per share, increasing the cash dividend by 14% for an annual payout rate $0.32 per share. The dividend will be paid on August 8, 2012, to stockholders of record as of July 25, 2012.  VSE has paid cash dividends since 1973 and has increased its dividend each year since 2004.  VSEC has a dividend yield of 1.36%.  VSE has an equity summary score of 9.2 out of 10 for a VERY Bullish outlook.

Cardinal Health (CAH) announced that its board of directors has approved a 10.5 percent increase in the company’s quarterly dividend to $0.2375 per share, or $0.95 per share on an annualized basis.  The regular dividend is payable on July 15 to shareholders of record on July 1. Cardinal Health has paid a $0.215 per share quarterly dividend since July 15, 2011. This is the 111th consecutive regular quarterly dividend.  CAH has a dividend yield of 2.21%.  CAH has an equity summary score of 9.3 out of 10 for a VERY Bullish outlook.

The Board of Directors of Chesapeake Utilities Corporation (CPK) declared a quarterly cash dividend of$0.365 per share on the Company’s common stock. The Board’s action raises the annualized dividend eight cents per share from $1.38 to $1.46 per share, equating to a 5.8% increase over the prior year.  The $0.365 per share dividend will be paid July 5, 2012 to all shareholders of record at the close of business on June 15, 2012.  CPK has a dividend yield of 3.49%.  CPK has an equity summary score of 7.9 out of 10 for a Bullish outlook.

PepsiCo Inc. (PEP) announced that it’ll increase its annual dividend by 4% to $2.15 a share, from $2.06 a share. Shareholders of record as of June 1 will be issued a quarterly payment of 53.8 cents as share on June 29. It’s the 40th consecutive annual dividend increase for the Purchase, N.Y., drinks and snack maker.  PEP has a dividend yield of 3.23%.  PEP has an equity summary score of 7.7 out of 10 for a Bullish outlook.

Bullish Stocks Increasing Dividends

A diverse group of companies have increased dividend payments in recent months, often to bolster investors’ confidence in their overall business prospects.  Here are companies increasing dividends with a bullish or better outlook indicating a buy rating.

Cardinal Health, Inc. (CAH) operates as a healthcare services company that provides pharmaceutical and medical products and services. The company operates in two segments, Pharmaceutical and Medical.  CAH announced that its board of directors has approved a 10.5 percent increase in the company’s quarterly dividend to$0.2375 per share, or $0.95 per share on an annualized basis.  The regular dividend is payable on July 15 to shareholders of record on July 1. CAH has paid a $0.215 per share quarterly dividend since July 15, 2011. This is the 111th consecutive regular quarterly dividend.  The new dividend yield is 2.22%.  CAH has a 5-year average annual dividend growth of 21%.  CAH has an equity summary score of 9.3 out of 10 for a VERY Bullish Outlook.

Domtar Corporation (UFS) engages in the design, manufacture, marketing, and distribution of fiber-based products in North America. The company operates in three segments: Pulp and Paper, Distribution, and Personal Care.  UFS announced that its Board of Directors has approved a 29% increase to its quarterly dividend (from $0.35 to $0.45per share) on its common stock.  The Board of Directors declared the dividend payable on July 16, 2012 to stockholders of record as of the close of business on June 15, 2012.   The new dividend yield is 2.13%.  UFS has increased its dividend 80% since 2010.  UFS has an equity summary score of 8.6 out of 10 for a Bullish Outlook.

AMETEK, Inc. (AME) manufactures and sells electronic instruments and electromechanical devices in North America, Europe, Asia, and South America. The company operates in two segments, Electronic Instruments Group and Electromechanical Group.

AMETEK, Inc. (AME) announced its Board of Directors has declared a three-for-two stock split and approved a 50% increase in the quarterly cash dividend on its common stock.  The three-for-two split of its common stock will result in the issuance of one additional common share for every two shares owned as of the record date.  The new shares are payable on June 29, 2012, to shareholders of record on June 15, 2012.  Any fractional shares resulting from the stock split will be paid in cash based on the closing market price of AME stock on the record date. By splitting its stock, AME expects to broaden the stock’s marketability and improve its trading liquidity.

After reviewing the Company’s strong financial position and future expectations, AME’s Board of Directors also has decided to increase the quarterly common stock dividend 50%, to an indicated annual rate of $.36 per share ($.24 per share on a post-split basis).  The Board of Directors declared the second quarter dividend of $.09 per share ($.06 per share on a post-split basis), payable on June 29, 2012 to shareholders of record on June 15, 2012.  The new dividend yield is 0.72%.  AME has a 5-year average annual dividend growth of 17%.  AME has an equity summary score of 7.5 out of 10 for a Bullish Outlook.

Barrick Gold Corporation (ABX) engages in the production and sale of gold and copper. The company has a portfolio of 26 operating mines, and exploration and development projects located in North America, South America, the Australia Pacific region, and Africa.  ABX announced a 33% increase in its quarterly payout to 20 cents per share. The new dividend will be paid June 15 to shareholders of record as of May 31. The new dividend yield is 2.11%.  ABX has a 5-year average annual dividend growth of 29%.  ABX has an equity summary score of 7.7 out of 10 for a Bullish Outlook.

 

5 Dividend Growers to Watch

Which is more important to an income investor – current dividend yield or future yield on cost?  The typical answer is – it depends.  My answer would be to have a portfolio of stocks that can provide both, current yield and growing dividends.  This is what I evaluate when I am looking at dividend stocks.  In addition, I use my valuation model to get an idea of what to expect in the next 10 years. Of course, the model only provides projections based on what is expected of the stock using its current growth rates.  Therefore, I update these estimates as the market evolves to determine what has changed that will affect my outlook of the stock.  This will tell me when to add or exit the position.  Here are 5 stocks I have evaluated based on the current market conditions.

Raytheon Company (RTN) designs, develops, manufactures, integrates, and supports technological products, services, and solutions for governmental and commercial customers in the United States and internationally.  RTN is currently trading at $50.36, 10% below its fair value.  RTN has an equity summary score of 9.4 of 10 indicating analysts are very bullish on this stock.  RTN has a current dividend yield of 3.4% with a dividend growth rate of 12%.  Looking
forward 10 years, RTN will have a yield on cost of 10.9%.

RTN had Q4 EPS of $1.58, vs. $1.37, which is above the $1.35 estimate, on higher operating margins than we expected.  Orders for 2011 rose 9% and book-to-bill was 1.1X.  Nevertheless, we see risk in potential defense budget “sequestration” and other budget cuts.  RTN will have a higher tax rate in 2012 and
will have gains from share repurchases through 2013. RTN has a target price of $55, on our view of RTN’s ability to maintain profitability despite a difficult
defense environment.  RTN Shares should be HOLD until more certainty regarding the defense cuts outlook.

Cardinal Health, Inc. (CAH) operates as a healthcare services company that provides pharmaceutical and medical products and services. The company operates in two segments, Pharmaceutical and Medical.  CAH is currently trading at $41.54, which is significantly below its fair value.  CAH has an equity summary score of 9.3 of 10 indicating analysts are very bullish on this stock.  CAH has a current dividend yield of 2.1% with a dividend growth rate of 12%.  Looking forward 10 years, CAH will have a yield on cost of 6.4% with a payout ratio of 27%.

CAH had Q2 FY 2012 non-GAAP EPS that climbed 11% to $0.81, beating the estimate by $0.02. The key Q2 driver was a 30% profit gain from drug distribution, reflecting internal growth, acquisitions and better margins.  However, medical products profits fell 18%, impacted by residual commodity cost
pressures. Looking to second half FY 2012, CAH will see continued double-digit EPS growth, lifted by expansion in higher-margin generics and greater
contributions from acquisitions. Based on its EPs growth and cheap market valuation, CAH should be a BUY.

Lockheed Martin Corporation (LMT) engages in the research, design, development, manufacture, integration, operation, and sustainment of advanced technology systems and products in the United States and internationally. LMT is currently trading at $88.29, which is 17% above its fair value.  LMT has an
equity summary score of 9.2 of 10 indicating analysts are very bullish on this stock.  LMT has a current dividend yield of 4.6% with a dividend growth rate of 12%.   Looking forward 10 years, LMT will have an impressive yield on cost of 14.1% if it reaches a payout ratio of 70%.

LMT had Q4 EPS of $2.14, vs. $2.28, above the $2.01 estimate. Sales fell 4% as operating margins rose 20 bps, to 8.9%, better than expected. We note F-35 low-rate production is being slowed by Pentagon, although LMT expects F-35 growth in 2012. Backlog rose 3%, year to year. We see mixed US govt. budget effects on LMT, with backlog up for Aeronautics and Electronics, but down for IS&GS and Space Systems. Based on defense cuts and overpriced stock, LMT should be a HOLD until the stocks pulls back to fair value.

Occidental Petroleum Corporation (OXY) operates as an oil and gas exploration and production company primarily in the United States. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing, and Other.  OXY is currently trading at $104.67, which is significantly below its fair value.  OXY has an equity summary score of 9.1 of 10 indicating analysts are very bullish on this stock.  OXY has a current dividend yield of 2.1% with a dividend growth rate of 10%.  Looking forward 10 years, OXY will have a yield on cost of 5.4%.

OXY had Q4 EPS of $2.02, vs. $1.49, beating the estimate by $0.19 on revenue from strong oil realizations. OXY lifted production 4% in 2011 as U.S. offset shut-ins in Libya and from production sharing contracts. Growth resulted from a ramp in Permian and California. U.S. is a key growth factor, offsetting issues in Libya and Yemen. OXY will have production up 6% in 2012 and 8% in 2013, on California. These shares should be a long-term BUY based on outlook and valuation.

Alliance Holdings GP, L.P (AHGP) produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents.  AHPG is currently trading at $49.83, which is right at its fair value.  AHGP has an equity summary score of 9.0 of 10
indicating analysts are very bullish on this stock.  AHGP has a current dividend yield of 5.1% with a dividend growth rate of 10%.  Looking forward 10 years, AHGP will have a yield on cost of 13.3%.

Reflecting record financial results for the year ended December 31, 2011, AHGP reported record net income for 2011 of $214.1 million, or $3.58 per basic and diluted limited partner unit, an increase of 22.8% compared to net income for the year ended December 31, 2010 of $174.3 million, or $2.91 per basic and diluted limited partner unit.  AHPG announced a dividend increase of 4.5% over the third quarter 2011 distribution of $0.61 per unit (an annualized rate
of $2.44 per unit).  AHGP enjoyed continued success in the 2011 as its distribution increased 20.9% over the prior year quarter.  We currently expect AHGP quarterly unitholder distributions in 2012 to grow at a pace similar to 2011.  AHGP is a BUY for income investors based on its growing dividend.

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