After the New Year holiday break, several companies are starting 2015 off well by increasing the dividends they pay their shareholders.
Dividend increases are beneficial not only because they make investors a bit richer, but also because they often improve the share price of the affected stock. The market, after all, is usually willing to pay that much more for the extra payout.
Last year was a fine year for dividend hikes; let's see if 2015 can top it. Meanwhile, some of those early raisers include the following companies.
Bank of the Ozarks (OZRK +0.35%)
Here we go again. Last week, this Southeastern regional banking group enacted the latest in a string of quarterly dividend boosts, increasing its payout by 4% to $0.13 per share.
This brings Bank of the Ozarks' dividend raise streak to eighteen straight quarters dating back to October 2010.
OZRK Dividend data by YCharts
In terms of fundamentals, the bank is an excellent performer. Profitability and efficiency are high, while the charge-off ratio (the non-performing loans the bank writes off compared to its total loans) is admirably low. Bank of the Ozarks has been guided by the same hand, CEO George Gleason, for many decades, so we can expect the firm to continue to return such solid results.
But this quality hasn't gone unnoticed; over the last few years, investors have piled into the stock, driving its price and resulting valuations high while dampening dividend yield. At the moment, the bank trades at 3.2 times tangible book value; other good regionals tend to be priced from one to two times or thereabouts. Meanwhile, Bank of the Ozarks' yield stands at 1.5%, lower than the current average of the S&P 500 component stocks.
The new dividend from Bank of the Ozarks is to be dispensed on Jan. 23 to shareholders of record as of Jan. 16.
Enterprise Products Partners (NYSE: EPD)
This concern is a master limited partnership -- a spin-off of income-producing energy assets that distributes the bulk of its earnings as unit-holder distributions. Enterprise Products Partners pays a quarterly one regularly and adds to it habitually. The latest version amounts to $0.37 per unit, 6% higher than its predecessor.
In the press release announcing the new payout, the partnership was happy to mention that it will be its 42nd consecutive quarterly increase.
Enterprise is one of the big players in the MLP segment. It's a powerhouse active in many facets of the oil services space, including pipeline operation, drilling, storage, and processing.
As that rising distribution indicates, the partnership has done a good job expanding its business. Bottom line (up 18% on a year-over-year basis), and distributable cash flow (7%) both saw healthy gains in Q3, with other key line items increasing as well.
EPD Net Income (Annual) data by YCharts
Even if the crude price stays stubbornly low, resulting in exploration and production curbs from domestic oil players, there will still be plenty of product to move, store, and process. Enterprise has many strong revenue streams, so there's every reason to believe it'll continue to do well, and continue pumping out an increasing distribution.
Enterprise Products Partners' upcoming disbursement will be handed out on Feb. 6 to unit holders of record as of Jan. 30.
Teekay LNG Partners (TGP +0.00%)
Elsewhere in the master limited partnership club is this concern, which true to its name concentrates mainly (although not exclusively) on the shipment of liquefied natural gas. As an MLP, Teekay LNG Partners also concentrates on its quarterly unit holder distribution, which last week was lifted incrementally by 1% to $0.70 per unit.
Teekay LNG Partners continues to grow its key financials, with revenue climbing by 3% on a year-over-year basis to $304 million in the first nine months of 2014. Net income advanced by 17% to $188 million over that stretch of time.
But building out a fleet of highly specialized LNG transport vehicles is not cheap. The partnership is very heavily leveraged, carrying nearly $1.75 billion in long-term debt as of the end of Q3. And last summer the company floated an issue of 2.8 million units to help finance the expansion of its fleet, a move that diluted existing shareholders by 4%.
TGP Total Long Term Debt (Quarterly) data by YCharts
The partnership has been running its business well, it seems, but it's in an extremely capital-intensive line of work. The debt load is heavy and those ships aren't going to build themselves. Considering that, it's perhaps not best to count on the partnership maintaining or increasing its dividend in the coming quarters and years.
Teekay LNG Partners' upcoming distribution is to be paid on Feb. 13 to shareholders of record as of Jan. 15.
