As promised, this will be the year that I finally pay myself. As such, I'm always on the lookout for companies that are putting shareholders first. In 2011 we witnessed 1,953 dividend increases, yet, as Fool Morgan Housel has pointed out, the overall payout ratio of the S&P 500 remains at a record-low 29%. This means it isn't just enough to find a dividend -- it's about finding a growing and sustainable dividend.
After perusing some of January's finest, I've settled on five companies that I feel went above and beyond the call of duty to provide for their shareholders last month, whether it was from a dividend increase or by initiating a dividend.
New Quarterly Dividend
Previous Quarterly Dividend
|Men's Wearhouse (NYSE: MW )||$0.18||$0.12||50%|
|Mattel (Nasdaq: MAT )||$0.31||$0.23||35%|
|Schlumberger (NYSE: SLB )||$0.275||$0.25||10%|
|Family Dollar (NYSE: FDO )||$0.21||$0.18||17%|
|Kensey Nash (Nasdaq: KNSY )||$0.25||$0||NM|
Source: Individual company press releases. NM = not meaningful.
Men's Warehouse gets my nod for the most impressive dividend increase in January -- a clean 50% hike. The company only began paying a dividend in 2006 and has now raised its dividend 260% since that initial payout of $0.05. Following a decisive earnings beat in December which was highlighted by a 315-basis-point increase in gross margins, Men's Wearhouse feels confident enough in its cash flow to return more cash to its shareholders. For those interested, the new yield is north of 2%!
Mattel's recent history of dividend payments has been erratic at best -- so to see the toy industry stabilizing and Mattel raising its quarterly distribution by 35% is a great sign. Fourth-quarter profit rose 14% and international sales were strong as price hikes enacted earlier in the year were well-accepted by consumers. Toys will always be a boom-and-bust sector, but Mattel's new yield of 4% just made it that much more bearable.
Schlumberger doesn't raise its dividend with regularity, but it has quietly more than doubled its distribution since December 2006. In 2011 Schlumberger grew revenue by 44% and profits by 28%, so raising its dividend seemed a logical step to returning wealth to shareholders. With its prospects in the Gulf of Mexico improving, Schlumberger's new yield of 1.4% makes it look that much more enticing.
I've come down harshly on dollar stores recently in part because consumer habits are fickle and easily subject to change. That didn't seem to matter much to Family Dollar, which boosted its quarterly dividend by 17% amid solid Christmas sales. In fact, since the company paid out its first dividend in 1976, it has grown that dividend annually by 16%. If that doesn't speak to shareholder commitment, then I don't know what does.
Finally, little-known Kensey Nash, a medical device company focused on regenerative medicine, initiated a quarterly dividend of -- get this -- $0.25! Kensey Nash didn't mess around and went straight for a $1 annual dividend thanks to what it feels will be continued strong cash flow. Perhaps exemplifying a "shareholders first" policy better than anyone, Kensey Nash decided to forgo share repurchases in favor of returning cash directly to shareholders. Needless to say, I'm sure they appreciate their new 4.5% yield.
Finding great dividends is all about value, growth, and sustainability, and these five companies definitely exhibited that in January. Consider adding these names to your free and personalized watchlist so you can keep track of the latest news with each company.
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- Add Men's Wearhouse to your watchlist.
- Add Mattel to your watchlist.
- Add Schlumberger to your watchlist.
- Add Family Dollar to your watchlist.
- Add Kensey Nash to your watchlist.