In terms of dividend raises, it's almost as if the holidays took place this month instead of in December. Over the past few weeks, many companies have gifted their stockholders with higher distributions.
Last week was no exception. By my count, 25 companies took the dividend-raising plunge. Here are three notable businesses among them.
It isn't easy for a stock to stay on the list of dividend aristocrats. After all, this status requires a company to lift its payout at least once annually for a minimum of 25 years in a row. Kudos to this engineering conglomerate, which has now been in the club for an incredible 59 years.
Specifically, Emerson Electric (NYSE:EMR) added 1% to its distribution, which is now almost $0.48 per share.
Fundamentals were likely the reason why the raise wasn't bigger. A strong dollar bit into the company's results, with fiscal 2015 net sales declining by 9% on a year-over-year basis to $22 billion. Although its bottom line rose by 26% to $2.7 billion, over $1 billion of this owed to gains on divestitures. On an adjusted basis, per-share earnings fell 15% to $3.17.
The near future doesn't look particularly rosy: Emerson Electric doesn't expect its various markets to recover significantly until the second half of 2016 at the earliest. But income investors shouldn't necessarily run away. The company still generates plenty of the green stuff, with annual free cash flow ranging from $1.8 billion to almost $3 billion over the past five years -- well above what it pays out in total dividends. Given the slight raise declared this week, those payouts are more than sustainable for now.
Our hands-down winner this week for best (and most appropriate) ticker symbol is this master limited partnership, an operator of amusement parks. Its quarterly distribution rollercoaster is climbing at the moment: Cedar Fair (NYSE:FUN) has raised its payout by 10% to nearly $0.83 per partnership unit.
Once upon a time (i.e., before the 2007-2008 financial crisis), Cedar Fair was a habitual dividend-raiser, pumping up its distribution on a regular basis. But then the partnership took on a lot of debt to buy assets, a move worsened by the crisis. In order to bandage its finances, Cedar Fair lowered, then later suspended, the payout. Since then, however, the fundamentals have recovered, and the distribution has returned.
The company isn't doing too badly these days, with a wide profit margin. Net revenue was up by 8% on a year-over-year basis to $645 million in the third quarter, while the bottom line saw a more modest 1% rise to $164 million.
Cedar Fair has a reassuringly long list of new rides, plus improvements to some of its existing facilities, slated to come online next year. That should keep up the growth momentum it has shown since the crisis. And it should help support the partnership's habit of raising its payout on a regular basis.
Cedar Fair's upcoming distribution is to be paid on Dec. 15 to unit holders as of Dec. 3.
General Growth Properties
Here's a shopping trip that actually pays us, instead of the other way around. This shopping mall-focused real estate investment trust has announced a 6% hike in its quarterly dividend to $0.19 per share.
Like Cedar Fair, General Growth Properties (NYSE:GGP) was hit hard by the financial crisis (the pullback in consumer spending was bad for malls), to the point where it filed for bankruptcy in 2009. Needless to say, the dividend was put on ice. Since then, the REIT has exited bankruptcy, returned to profitability, and restored the payout.
Lately, a healthy economy and rising consumer spending have helped boost initial rental rates and tenant sales for the REIT's properties. As a result, profitability rose notably in Q3, landing at nearly $124 million compared to Q3 2014's tally of $75 million.
The REIT is optimistic about the future, believing that funds from operations (a key profitability metric in the industry) will be $1.51 to $1.55 per share next fiscal year, up nicely from an anticipated $1.42 to $1.44 for 2015.
That leads me to believe that the dividend is fairly safe for now, especially if the REIT keeps increasing it only incrementally. But there are more compelling investments in the real estate sphere, and this stock's dividend yield (2.8%) is rather low for a REIT.
General Growth Properties' freshly raised payout is to be dispensed on Jan. 4 to holders of record as of Dec. 15.
Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Emerson Electric. 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.
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