As expected, the start of the year's second earnings season has unleashed a new flock of dividend raises. As it's early days, we're sure to see at least a few more in the coming days and weeks.
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While we look forward to that, let's take a glance back at last week's lifters. They include:
Enterprise Products Partners
Master limited partnership Enterprise Products Partners (EPD +0.78%) is mastering yet another quarterly distribution raise. It has declared a payout of $0.40 per unit, 5.3% higher than its predecessor.
That's business as usual for the partnership, which has now bumped its distribution for 48 quarters in a row stretching back to mid-2004.
EPD Dividend data by YCharts
That might be a bit unexpected for a business in the energy sector. However, Enterprise Products Partners is somewhat insulated from weakened oil prices because it concentrates on the provision of infrastructure (pipelines, storage, etc).
As a result, its finances haven't been slammed as much as peer companies more directly involved in the extraction and sale of black gold. The partnership's profitability and -- more importantly for distribution purposes -- distributable cash flow have actually held up quite well. It also remains nicely profitable on the bottom line, at $670 million for its Q1.
I think it will continue to perform, given how well it's coping with the downturn. And continued profitability should support the dividend, which I believe will continue to rise incrementally. For income investors that have the nerve to contend with a challenging sector, this stock is certainly worthy of consideration.
Enterprise Products Partners' new distribution will be paid on Aug. 5 to unit holders of record as of July 29. It would yield 5.4% at the current unit price, well above the 2% average yield of dividend-paying stocks on the S&P 500.
The Greenbrier Companies
An interesting sideways play on the US transportation sector, railcar and barge maker The Greenbrier Companies (GBX +0.28%) is hiking its quarterly dividend despite notable drops in key fundamentals. The company will pay $0.21 per share, a 5% improvement over the current level.
The dividend is going in the opposite direction as the company's results. This is due to softness in the global economy, plus those aforementioned lower oil prices (which soften demand from energy companies shipping their wares), not to mention reduced prices for many commodities.
In Greenbrier's most recently reported quarter, it booked a net profit of over $35 million, 17% below the same period last year. Revenue also saw a decline, by 14% to $613 million. Both figures, however, beat the average analyst estimates. Additionally, the company's backlog remains strong, while certain foreign markets seem to be picking up.
Meanwhile, recently Greenbrier has done a good job growing operating and free cash flow in spite of what it terms the "headwinds" buffeting its business. Sooner or later, its markets will recover, therefore I don't think the freshly raised dividend will come under threat. To me, Greenbrier looks like a fairly good buy on the down side of a cycle just now.
GBX Free Cash Flow (TTM) data by YCharts
Greenbrier's upcoming payout is to be dispensed on Aug. 10 to stockholders of record as of July 20. It would yield 2.6% on the most recent closing share price.
Paychex
Payments processing specialist Paychex (PAYX +1.17%) is about to cut bigger checks for its investors. It has lifted its quarterly dividend by 10% to $0.46 per share. Additionally, it has launched a new $350 million share repurchase program.
The company is a habitual dividend payer stretching back for several decades. In recent years it's tended to hike the payout annually around this time of the year.
The announcement of the latest one comes on the heels of Paychex's Q4 and fiscal 2016 results, both of which showed encouraging growth where it counts. Revenue grew by a respective 9% and 8% (to $754 million and $2.95 billion), while net income advanced by 11% and 12% (to $178 million and $757 million).
PAYX Net Income (TTM) data by YCharts
Paychex's balance sheet is clean, with over $6.4 billion in assets and no debt. Meanwhile, operating cash flow in fiscal 2016 crossed the $1 billion mark, providing more than enough for both the dividend and that year's set of stock buybacks. Paychex is in good financial shape, and investors shouldn't worry about the viability of its payout.
The company's raised dividend will be handed out on Aug. 25 to shareholders of record as of Aug. 1. It would yield just over 3% at the latest closing stock price. That number isn't as compelling as some financials, but the company's doing well and its stock seems to have upside potential.
The end date for the new stock repurchase initiative is May 31, 2019.
