These Stocks Just Raised Their Dividends

A master limited partnership, a regional banking group, and a packaged food specialist comprise our trio of lifters for this installment.

Eric Volkman
Eric Volkman
Jul 31, 2015 at 6:20PM
Investment Planning

As second-quarter earnings season winds down, we can expect the flow of dividend declarations to thin out to a trickle. Before it does, though, they continue to rush down the pipe thick and fast. Here are three of the more compelling stocks from last week's crop of raisers.

Energy Transfer Partners (NYSE:ETP)
The energy industry might be in a tailspin because of persistently low oil prices, but you'd never know it from the continued generosity of master limited partnerships like this one. Energy Transfer Partners has upped its quarterly distribution by 2% to nearly $1.04 per unit.

This represents the eighth consecutive raise for the partnership, a series of bumps that has lifted the payout from just over $0.89 to the current level.

ETP Dividend Chart

ETP Dividend data by YCharts.

Like many of its peers in the crude oil derivatives space these days, Energy Transfer Partners has seen its revenues erode and its bottom line dip into the red lately.

Yet distributable cash flow -- the key line item for master limited partnerships, from whence it derives the dosh to pay unit holders -- has held up pretty well.

What helps greatly is that the partnership concentrates on the transportation of oil products (particularly natural gas liquids), doing so on the basis of fixed-fee, long-term contracts. This is a solid, middle-man business that insulates it (at least somewhat) from the vagaries of the crude price.

As far as the distribution is concerned, its future will depend on whether the partnership can avoid bigger slides in distributable cash flow. That's a bit iffy at the moment given what's happening with crude, but this management is talented, and I think they'll be able to pull it off.

Energy Transfer Partners' upcoming distribution is to be paid on August 14 to unit holders of record as of August 6.

Bancorp South (NYSE:BXS)
The nice thing about some banks is that when they feel generous, they like to show us the money. That's the case with this regional lender, which has hiked its quarterly distribution a meaty 33% to $0.10 per share.

Compared to its nationwide peers, the regional segment is an interesting corner of the market these days. It tends to be populated by more traditional lenders who eschew the fancier products for a simpler business model based on classic lend-and-profit banking.

BancorpSouth's puffed-up dividend comes on the heels of its Q2 earnings release, its most profitable quarter since 2008. The bottom line advanced by nearly 30% on a year-over-year basis to reach almost $40 million. This was on the back of a 4% bump in net interest revenue, to $107 million.

BXS Net Interest Income (Quarterly) Chart

BXS Net Interest Income (Quarterly) data by YCharts.

The company is trying to grow through acquisitions, but this is a slow game in the banking arena. At the beginning of last year, it announced it had reached agreements to merge with a pair of smaller banking groups, Central Community and Ouachita Bancshares.

Both were supposed to close by the end of this past June, but regulatory issues have made BancorpSuth push that date ahead to December 31. So, the bank has opportunity to grow at a faster rate -- it just needs to clear those hurdles.

Meanwhile, looking at the company's free cash flow, I think the dividend is safe. Annual FCF is running at about five times what the bank pays out in dividends, so even with that big raise, it can well afford the new largesse.

BancorpSouth's new distribution will be handed out on October 1 to shareholders of record as of September 15.

B&G Foods (NYSE:BGS)
This comestibles manufacturer has historically been a cautious dividend raiser. True to its nature, last week it lifted its quarterly payout by 3% to $0.35 per share.

B&G makes pre-packed foods; perhaps its most popular item at the moment is the Pirate's Booty line of snacks. This brand, like the careful dividend increases, is in B&G's portfolio thanks to another company habit -- growing through acquisitions.

Pirate Brands (the company that distributes Booty) was purchased in 2013 for nearly $200 million, followed by a series of other opportunistic buys. These included Specialty Brands ($144 million) in 2014, and the recently announced $50 million purchase of Spartan Foods.

Fed by these new assets, and aided by some effective cost management, B&G Foods has managed to boost its results. The bottom line for the first two quarters of 2015 rose by 13% on a year-over-year basis to $38 million, on the back of a 2% rise in net sales to $411 million.

The company tends to land in the black, helping to boost free cash flow and provide money for those frequent acquisitions and the dividend. B&G Foods boasts a high payout ratio, which is a bit of a concern, but it usually manages to sustain or increase its distribution nevertheless.

BGS Net Income (Annual) Chart

BGS Net Income (Annual) data by YCharts.

If I were an investor, then, I'd keep a wary eye on the FCF number, but generally, I'd be optimistic about the future viability of the payout.

B&G Foods' next dividend is to be distributed on October 30 to holders of record as of September 30.