As expected, last week saw a steady flow of dividend declarations and raises. Earnings season is in full swing, after all. A varied set of companies increased their distributions, with a few famous names among them.
With a bigger selection, there are more stocks to choose from for this installment of our series. So we're back up to three raisers, after only offering two in the previous article. Our trio consists of:
RPM International (RPM +3.02%)
To no one's surprise, this coatings and sealants maker last week increased its quarterly payout, by 6% to $0.28 per share.
The complete lack of shock around its increase is due to the fact that RPM International is a dividend aristocrat, a company that has hiked its dividend at least once annually for a minimum of 25 years in a row. The stock has more than earned its aristocrat status; this latest bump will be its 42nd in sequence.
But not all the recent news about the company has been encouraging. In its first quarter, sales and net profit both came in below analysts' estimates -- although they did rise on a year-over-year basis, with sales ticking up by 3% to $1.2 billion, and profits by almost 1% to $100 million. Nevertheless, full-year bottom line guidance was cut by $0.05 to $2.50 per share.
These recent fundamentals are a concern, but they shouldn't discourage income investors from owning the stock. RPM International's free cash flow is strong and likely to remain so, and the amount is far higher than what it hands out in dividends. So I think the company will maintain its lofty aristocrat status moving forward.
RPM Free Cash Flow (Annual) data by YCharts
RPM International's next dividend is to be distributed on Oct. 30 to shareholders of record as of Oct. 19.
Ameren (AEE 1.84%)
This big Midwestern electricity and gas utility is keeping the lights on with its payout. Ameren has bumped its quarterly distribution nearly 4% higher to just under $0.43 per share.
Of late, the company has aped the RPM Internationals of this world by lifting the payout once a year, although it's too early to tell whether this will become a habit. Prior to the current raise, it increased its dividend in late 2014. However, in the nearly 20 years before that, it did so only once.
AEE Dividend data by YCharts
As a utility, Ameren's results tend not to whipsaw around too much. In its most recently reported quarter, total revenues came in at $1.4 billion, while net profit was $150 million, both essentially flat on a year-over-year basis.
For the full year, the company expects to post earnings in the range of $2.48 to $2.68 per share. That's above the $2.40 per share it made in 2014, but not excessively so.
Meanwhile, its free cash flow has dipped into the red more than once. Going forward, if Ameren manages to land on the higher end of its profitability estimates, it stands a good chance of turning those figures positive. It operates a steady, profitable business, so if I were a betting man, I'd wager on it at least maintaining that dividend for now.
Ameren's next payout will be dispensed on Dec. 31 to stockholders of record as of Dec. 9.
Yum! Brands (YUM +1.38%)
You've eaten its food, now help yourself to some of its earnings. Yum! Brands, operator of omnipresent fast-food joints KFC, Pizza Hut, and Taco Bell, is slathering 6% more sauce onto its quarterly dividend. It now stands at $0.46 per share.
That increase wasn't enough to help the stock price, though, which dropped precipitously last week on the back of discouraging third quarter figures (released concurrently with the dividend declaration). Although top and bottom lines inched higher compared to a year earlier, both were notably under analysts' estimates.
Weakness in China -- the company's largest foreign market -- was the main culprit. That'll likely continue to drag on earnings in the proximate future, and Yum! Brands is now expecting full-year EPS growth to be "well below" its original forecast of at least 10%. Analysts, meanwhile, had collectively estimated that growth rate would come in at just under 14% (to $3.51).
That said, while net profit isn't growing robustly, it is growing, adding to Yum! Brands' operating and free cash flow. Both were significantly higher compared to both the preceding quarter and Q3 2014.
So the company should be able to keep its payout at least steady for the foreseeable future. Investors, however, should keep a close watch on how those China numbers develop.
Yum! Brands' increased dividend will be paid on Nov. 6 to shareholders of record as of Oct. 16.
