A fresh earnings season starts this week, but you almost wouldn't know it from the recent round of dividend raises on the market. This pre-earnings season period was anything but fallow. Case in point: Last week, true to this year's form, saw a clutch of new distribution increases.
As usual so far in 2017, I had numerous issuers to pick from -- here are my chosen three.
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Cummins
A steady and regular dividend raiser, Cummins (CMI +0.06%) is upping its quarterly payout by 5% to $1.08 per share.
This year's edition has plenty of tailwind. In the company's most recently reported quarter, it booked an encouraging 7% year-over-year sales increase to almost $4.6 billion, with net income seeing a livelier bounce of 23% to $396 million. Both results topped analyst expectations, the latter overwhelmingly so.
Cummins attributed the gains mainly to robust demand from its clientele in the mining and construction industries; a jump in international sales also helped beef up those numbers. The good times are expected to continue, as Cummins made upward revisions in its revenue and EBIT guidance for the entirety of fiscal 2017.
Meanwhile, the company has managed to maintain a healthy level of free cash flow, while its spending on stock buybacks has come down lately. That leaves more than enough room for that 5% dividend bump, and then some. I think Cummins will manage to at least maintain the new payout.
CMI Free Cash Flow (TTM) data by YCharts
The company's new dividend is to be dispensed on Sept. 1 to stockholders of record as of Aug. 18. At the current share price, it would yield 2.6%. That's a comfortable distance above the current 1.9% average of dividend-paying stocks on the S&P 500 index.
National Retail Properties
Another single-digit raiser of recent days is National Retail Properties (NNN +0.25%). The real estate investment trust has lifted its quarterly dividend by 4% to just under $0.48 per share. That, by the way, will mark 2017 as the 28th year in a row the company has boosted its payout.
If it were included on the S&P 500, that feat would make it one of the index's vaunted Dividend Aristocrats. We can call the REIT a Stealth Aristocrat, then.
NNN Dividend data by YCharts
National Retail Properties is a solid performer and a leader in the retail REIT segment. It has over 2,500 properties located in virtually every state in the U.S. and a collective occupancy rate that tops 99%. The company's Q1 saw it increase revenue by 11% on a year-over-year basis to $141 million, with adjusted funds from operations, the key profitability line item for REITs, rising 9% to just over $89 million.
On a per-share basis, adjusted funds from operations came in at $0.60 per share, which is well above what the company is paying out in dividends these days. National Retail Properties keeps delivering, and despite the current struggles of the retail sector, I think the company has a solid grip on its industry and will continue to do well. I think this dividend is very safe.
National Retail Properties will pay its upcoming distribution on Aug. 15 to shareholders of record as of July 31. It yields a theoretical 4.8%.
Occidental Petroleum
For the 15th year in a row, Occidental Petroleum (OXY +2.76%) is raising its quarterly payout. The veteran oil and gas company is adding $0.01 (or 1%) to it, for a total of $0.77 per share.
That's admirable, considering Occidental has been a company in transition over the past few years, divesting assets to boost efficiency and profitability. It might be emerging from a period of adjustment to the new model; a string of bottom-line losses was followed by quite a good Q1 that saw it flip to a net profit on the bottom line and improve its revenue by a strong 38% on a year-over-year basis.
The future looks promising for Occidental, not least because it has a heavy presence in the still-hot Permian Basin play that sprawls across Texas and New Mexico.
Meanwhile, Occidental's cash flow from operations has been steady over the past two years, while its capital expenditures have declined. That bodes well for future dividend increases, even if the company has been free cash flow-negative in the past.
OXY Cash from Operations (TTM) data by YCharts
Like other energy companies lately, Occidental's fortunes have been a bit up and down, but I think we might be seeing the start of a good period for the company. I'd bet this new dividend will at least be maintained.
That distribution is to be paid on Oct. 16 to investors of record as of Sept. 11. It would yield 5.1% at the company's most recent closing share price.
