October is about to end, but we probably can't say the same about the recent slew of dividend raises. That's because we remain in the glow of third-quarter earnings season, and ambitious companies are still adding to their payouts.
By my count, more than 40 companies enhanced their distributions last week. Here are three of the more compelling dividend hikes investors should know about.
Seagate Technology
This top hard disk drive maker isn't shy about shelling out a dividend. True to form, Seagate Technology (STX) declared a 17% increase in its quarterly payout to $0.63 per share.
STX Dividend data by YCharts
The company's other financials, however, aren't rising. In its most recent quarter, Seagate Technology posted an 11% year-over-year drop in revenue to $2.9 billion and a 57% decline in net profit to $138 million.
That's no surprise: HDDs are going the way of the dodo bird as solid-state storage advances. Unlike Western Digital, Seagate hasn't made a big move into the SSD space akin to that rival's recently announced deal to buy SanDisk.
If SeaGate doesn't catch up with its industry, those fundamentals will likely continue to slip, and the resources for paying its dividend will start to evaporate. Yet at the moment, the company still has a comfortable cash cushion. In its most recent fiscal year, it had over $1.9 billion in free cash flow -- far more than enough to cover $664 million in total payouts.
Seagate should at least be able to maintain the new dividend in the short term, though the long-term sustainability of its payout depends on its ability to snag a share of the SSD market.
The company's upcoming distribution will be handed out on Nov. 20 to shareholders of record as of Nov. 6.
Dow Chemical
Following a host of recent divestments, Dow Chemical (DOW) continues to make transformative maneuvers such as adjusting the responsibilities of several top executives and boosting its participation in (or support of) several joint ventures.
Oh, and Dow has also raised its dividend by almost 10% to $0.46 per share.
DOW Dividend data by YCharts
While the company has been a hive of activity and change, it has also done pretty well in terms of operations. In its Q3, it booked sales of $12 billion and netted a profit of almost $1.3 billion ($1.09 per share on an adjusted basis). Per-share operating earnings were $0.82, well above analysts' average expectation of $0.69.
That added handsomely to the company's cash from operations, which rose by over $700 million on an annual basis to $2.5 billion in the quarter. Provided that Dow maintains its recent habit of keeping quarterly capital expenditures in the $900 million to $1 billion range, the extra money should provide more than enough of a cushion for its dividend hike.
That, combined with the recent better-than-expected profitability, means investors shouldn't worry much about the sustainability of the distribution.
Said payout is to be dispensed on Jan. 29, 2016, to stockholders of record as of Dec. 31.
Synovus Financial
One of the better-performing corners of the financial industry recently has been regional banking. For evidence, see the latest act of shareholder generosity from Synovus Financial (NYSE: SVN). This lender, which operates in five Southeastern states, announced a 20% increase in its quarterly payout to $0.12 per share.
The dividend is supported by good fundamentals. The bank's Q3 saw it post a 19% year-over-year rise in net income to $160 million, despite essentially flat net interest income (which grew 1% to $208 million). Credit quality improved, with both net charge-offs and the percentage of non-performing loans declining from Q3 2014.
The chunky dividend raise might worry some investors concerned about sustainability. But Synovus Financial is fairly conservative in its business practices -- particularly in relation to its payout. Since 2010, the trailing 12-month cash dividend payout ratio hasn't exceeded a modest 20%.
SNV Cash Dividend Payout Ratio (TTM) data by YCharts
Meanwhile, the lender has generally been firmly in the black recently. As such, we can count on it being more than able to support its distribution, even at this enhanced level.
Synovus Financial's upcoming dividend is to be handed out in January of next year; the company has not yet provided more specific timing.
