Although we’ve seen a modest retracement from our all-time highs set two weeks ago, the markets have yielded seven straight months of gains to investors. A combination of an improving jobs market, rising home prices, and ongoing record low lending rates is creating a slow but steady recovery and giving investors ample reason to be optimistic about the future.
In fact, things have been so good – with all three indexes up double-digits year-to-date — that income stocks have sort of been lost in the mix, but they shouldn’t be.
We know for a fact that peaks and troughs are a natural part of the economic cycle and dividend income can be quite the sustaining factor to one’s portfolio in both good and bad times. Today I propose to look at seven companies that have doubled, or more than doubled, their dividend so far this year and see if they offer a compelling investing thesis beyond just their big dividend boost.
| Company | Previous Quarterly Dividend | New Quarterly Dividend | Change |
|---|---|---|---|
| Southwest Airlines Co. (NYSE:LUV) | $0.01 | $0.04 | 300% |
| Helmerich & Payne, Inc. (NYSE:HP) | $0.15 | $0.50 | 233% |
| Regions Financial (NYSE:RF) | $0.01 | $0.03 | 200% |
| Ford Motor Company (NYSE:F) | $0.05 | $0.10 | 100% |
| Mastercard Inc (NYSE:MA) | $0.30 | $0.60 | 100% |
| National-Oilwell Varco, Inc. (NYSE:NOV) | $0.13 | $0.26 | 100% |
| Allison Transmission Holdings Inc (NYSE:ALSN) | $0.06 | $0.12 | 100% |
Source: Individual company press releases.
Southwest Airlines
Southwest Airlines Co. (NYSE:LUV) has certainly never been a slouch in the airline industry, maintaining profitability even during tough times and gaining market share through its passenger-friendly “bags fly free” program.
Source: Josh Beasley, Wikimedia Commons .
In an effort to return more cash to shareholders, the company quadrupled its dividend in May to what amounts to an annual yield of 1.1%, and it boosted its existing share repurchase program to $1.5 billion from $1 billion.
While clearly a standout in its sector, I can’t help but be concerned about the catch-22 that constantly threatens to take down the airline industry. If the economy is booming, then oil prices are likely to rise and fuel costs will cripple margins. Conversely, if the economy is weak, fuel costs remain low, but traffic rates drop. This is a capital intensive and low margin business that still doesn’t excite me, even with a quadrupling in its dividend.
Helmerich & Payne
Contract driller Helmerich & Payne, Inc. (NYSE:HP) definitely got the attention of investors this week when it more than tripled its annual payout from $0.60 to $2.00. The new yield of 3.2% puts it among drilling’s elite companies.
Though Helmerich & Payne, Inc. (NYSE:HP) operates rigs offshore and overseas, the vast majority of its drilling rigs (88% to be exact) are land rigs based in the U.S. With such an abundance of shale natural gas and oil found over the past decade and the Obama administration keen on making America more energy independent, you can rest assured that Helmerich & Payne, Inc. (NYSE:HP)is going to be a busy bee for years to come.
Regions Financial
Following March’s latest round of stress tests on the nation’s largest financial institutions, Regions Financial approved a tripling in its quarterly payout to $0.03 from $0.01 as part of its plan to return cash back to shareholders.
