First-Quarter Dividend Champions

With the first quarter now in the books, and profits for companies in the S&P 500 generally outpacing analysts' expectations, it makes sense to step back and closely analyze which companies were the real standouts. I'm not looking for companies that shot up 30% in a day, or received a takeover bid. Instead, I want to look at companies that exhibited strong growth during the quarter, and rewarded shareholders with a sizable dividend increase.

After poring through countless reports in the past three months, I can honestly say that the following seven companies are my first-quarter dividend champions.

Stanley Black & Decker (NYSE: SWK  )
I'm not handing out any bonus points here, since every company on this list did remarkably well, but Stanley Black & Decker deserves an A+ for the quarter. After merging two separate businesses together last year -- Stanley Works and Black & Decker -- the combined savings from the merger and the significant reduction in retail exposure have turned the company into a beast.

The new company, which mixes do-it-yourself and professional tools with security systems, announced 7% organic growth for the quarter, and anticipated future benefits and expansion. This strength and confidence allowed the company to announce a whopping 20.6% increase in its quarterly dividend. Currently yielding 2.2%, the stock may have plenty of room left to run.

Reliance Steel (NYSE: RS  )
Remember that dividend investing is not always about the yield; consistency and future growth prospects matter, too. I know plenty of you are sneering at the sub-1% dividend yield and bypassing Reliance altogether, but considering that Reliance has paid a quarterly dividend for 51 years, it's a relatively safe bet.

Also, think about Reliance in terms of the impending rebuild in Japan. Its steel could be a large part of Japan's reconstruction. Reliance is bullish about its future growth prospects, and it's no surprise that the company raised its quarterly dividend by 20% last quarter.

Cisco Systems (Nasdaq: CSCO  )
Hell did not freeze over, and yes, you are reading that correctly -- Cisco Systems. After trading publicly for 21 years, Cisco initiated its first-ever quarterly dividend of $0.06, in part to reward shareholders, but also to invigorate interest in the company, which has slipped considerably over the past year.

The world's largest IT networking company has generated more than $10 billion in operating cash flow over the trailing 12 months and has $25 billion in net cash. To top that off, by historical standards Cisco is incredibly inexpensive, with a forward P/E less than 10. If you ask me, management has connected all the right wires here.

JPMorgan Chase (NYSE: JPM  )
We all love to hate large banks, but they are once again well-capitalized and nearly all -- save for Bank of America -- have been given the green light to increase their dividends. JPMorgan responded by raising its dividend fivefold, from $0.05 to $0.25 per quarter.

Considerably lower loan loss reserves, especially in its credit card division, fueled this dividend jump. It also doesn't hurt that the Federal Reserve is actively buying Treasuries, which has helped put mounds of cash into banks' pockets. JPMorgan's dividend yield now exceeds 2%, and a few more quarters of strong growth could send it higher.

ConocoPhillips (NYSE: COP  )
Profits are booming in the oil sector as oil approaches $110 a barrel. ConocoPhillips' refining capacity has been higher than anticipated, and those higher crude prices have given margins an added boost.

This strength has helped the company initiate another $10 billion stock buyback, which adds to the $2.6 billion in stock the company purchased during its most recent quarter. Conoco's current dividend yield is a delectable 3.3%, thanks largely to the 20% quarterly dividend increase the company authorized in late January. This has all the makings of a long-term winner.

Kohl's (NYSE: KSS  )
Who says retail stores are out to take advantage of you? I believe the management at Kohl's has shown us the exact opposite of that in the past three months. The board sent a very decisive message to shareholders this quarter that it plans to share its profits from this point on.

Kohl's, which has significantly outperformed Sears Holdings of late, authorized a more than tripling of its original share buyback, and initiated a $0.25 quarterly dividend in late February. Shareholders have to be thrilled to see such bullish reinvestment in the company, and so should you.

Alliance Resource Partners (Nasdaq: ARLP  )
Finally, no dividend champions list would be complete without Alliance Resource Partners. This company, which supplies coal to utilities and the industrial sector, has raised its dividend an astounding 24 times over the past 11 years. Last quarter was no exception.

Riding the coattails of continued earnings strength, Alliance Resource hiked its dividend another 3.6%. Even after an almost uninterrupted two-year uptrend, the stock still yields more than 4%. The company has quickly become a dividend income staple for investors.

What dividend-paying companies are currently on your watchlist? Share your thoughts below and consider tracking my dividend champions, as well as your own list of personalized companies, with My Watchlist.

Add Stanley Black & Decker, Reliance Steel, Cisco Systems, JPMorgan Chase, ConocoPhillips, Kohl's, and Alliance Resource Partners to My Watchlist.

Fool contributor Sean Williams does not own shares of any companies mentioned in this article. He would like to remind you not to forget about our friends in Japan who could use a helping hand. You can follow him on CAPS under the screen name TMFUltraLong. Alliance Resource Partners LP is a Motley Fool Income Investor recommendation. Motley Fool Alpha LLC owns shares of Cisco, while the Fool has created a bull call spread position in Cisco. The Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that always puts investors first.


Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1470131, ~/Articles/ArticleHandler.aspx, 4/16/2014 9:35:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement