It's hard to find an investor who isn't cheered when one (or more!) of their stocks declares a dividend raise.
These not only put extra money directly into the lucky shareholder's pocket, but also often improve the stock price, as the market is willing to pay that much more for the extra payout. Companies that improve their long-term fundamentals typically have extra resources to add to their distribution over time.
As has been the trend lately, last week saw several noted companies hike their distributions. Three that particularly stood out were:
Walt Disney (NYSE:DIS)
If you've ever seen a movie, watched TV, or strolled the toy aisle of your favorite general retailer, Disney needs no introduction. The famous company has boosted its annual payout by 34% to $1.15 per share for this year.
That dividend is more than sustainable. The company's done a fine job of growing its business over the years -- in fact, fiscal 2014 smashed its previous records for revenue and net income -- and the future looks bright, with plenty of strong film and TV content in the pipeline, and the company's first theme park in mainland China set to open its doors in 2016.
It should be noted, though, that Disney's shares trade at an all-time high (which is saying something for a firm that has been around for decades). Consequently, the stock's price to earnings ratio (22 at present) is loftier than it's often been in the past. Potential investors need to consider these factors before snapping up shares.
Disney's annual dividend will be paid on January 8 to stockholders of record as of December 15.
Speaking of dividend hikes well timed for the holiday season, MasterCard (NYSE:MA) -- the brand by which a great many presents will be bought -- has also instituted a hefty dividend raise. The company will pay $0.16 per share for its next distribution, or 45% higher than its predecessor.
I've written a longer analysis about this dividend hike and its sustainability. To boil it down for this digest, although the increase is high in percentage terms, MasterCard has been paying a very low dividend (in yield terms) for quite some time and this isn't going to change with the new payout.
Yes, those numbers are well under 1%. The dividend is not only a minuscule part of the company's per-share profit, it's also a fraction of its current cash position. The firm's cash and short-term investments total was $7.8 billion at the end of its Q3, while the new dividend will see it shell out a mere $178 million to its shareholders.
So worrying about whether MasterCard's dividend will dive or expire is like worrying about the company going out of business. In other words, it ain't gonna happen anytime soon.
MasterCard's raised dividend is to be paid on February 9 to holders of record as of January 9.
This firm is ubiquitous these days without being widely known by the general public. It manufactures Gorilla Glass, a high-tech material used in a great many smartphones and tablets (among other products). Talk about a hot market! Corning is highly profitable, and this is reflected in its latest quarterly dividend raise -- by 20% to $0.12 per share.
The company's Q3 was a good indication of where it seems to be headed. Net sales jumped by 23% year-over-year (to $2.5 billion), while bottom line more than doubled (to just over $1 billion).
Note that Corning had an extremely high net profit margin. This helped greatly increase its cash from operations and its free cash flow. The latter, which came in at $2.9 billion for the first nine months of this year, was far more than the $439 million the company paid out in dividends.
Although the free cash flow number is higher than usual for the company, it nevertheless illustrates its traditional habit of living within its means as far as the dividend is concerned. The company should hopefully continue to be prosperous, while keeping those dividends flowing to shareholders.
Corning's upcoming distribution is to be handed out on March 31 to stockholders of record as of February 27.
Eric Volkman owns shares of Walt Disney. The Motley Fool both recommends and owns shares of Corning, MasterCard, and Walt Disney. 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.