Three Small Companies Demostrate Resilence by Dividend Increases

increaseThe wheat is getting separated from the chaff. While big names were cutting dividends to manage their debt, there are slew of mid to small cap companies that are continuing to show resilience, and  continuing to show how to manage sustainable and profitable business even in recession. Many companies are continuing to make sure shareholders have a stake in the business by increasing dividends. Among these dividend growers, following are three companies that have received by attention for the dividend increase.


Lincoln Electric Holdings Inc. (LECO): LECO manufactures and sells welding and cutting products worldwide. The products are mostly sold to industrial customers in general metal fabrication, power generation and process industry, structural steel construction, heavy equipment fabrication, shipbuilding, automotive, pipe mills and pipelines, and offshore oil and gas exploration and extraction markets. The company was founded in 1895 and has headquarters in Cleveland, Ohio. It is part of S&P 400 MidCap index.

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Clarcor and ConAgra can Sustain Dividends

growthThere are companies out there that are continuing to increase dividends for their shareholders. While dividend increase is good, it is more critical to make sure we understand that companies can sustain their dividends. Following are two companies that recently announced their quarterly results and increased dividends.


Clarcor Inc. (CLC): It is a diversified marketer and manufacturer of mobile and industrial filtration products and consumer and industrial packaging products.

  • It is a dividend achiever has paid growing dividends for last 22 years. Most recent dividend increase of 8.3% was in October 2009.
  • The 3Q09 earning per share was $0.42 (vs. $0.50 in 3Q08).
  • The key highlight was improving operating profits and net earnings for fiscal year 2009.
  • The cash flow improved to $93million for first nine months (from $79million)
  • The 2009 earnings is expected to be $1.30 to $1.40.
  • Yearly dividend of $0.39/share appears to be well covered with earnings.
  • This payout ratio is at 30% and current dividend yield is 1.30%


ConAgra Foods Inc., (CAG): It is one of the largest US packaged food processors with $11.6 billion in revenues.

  • It has been paying dividends for more 25 years but not growing dividends. It has cut and/or suspended its dividends in these years. Most recent dividend increase of 5% was in September 2009.
  • The 1Q10 earning per share was $0.37 (vs. $0.23 in 1Q09).
  • The key aspects were significant increase in earnings and operating profits. It appears this increase is a combination of share buybacks and reduced operating costs.
  • The yearly dividend of $0.80/share appears to be covered with expected earnings of $1.70/share for year 2010.
  • The payout ratio is approx. 47% and current dividend yield is 3.8%.


At a high level and in the context of stocks screening, CLC and CAG demonstrate ability to cover and sustain their dividends.

Three Companies with Sustainable Dividends

growthEven in soft economic environment, there are companies out there that are continuing to increase dividends for their shareholders. While dividend increase is good, it is more critical to make sure we understand that companies can sustain their dividends. Following are four companies that recently announced their quarterly results and increased dividends.


Brady Corp (BRC): It is a dividend achiever and has paid increasing dividends for last 24 years. Most recent dividend increase of 2.9% was in September 2009.

The 4Q09 earning per share was $0.37 (vs. $0.64 in 4Q08).

  • The key highlight was $127million cash flow from operations.
  • For year 2009, EPS was $1.33 (vs. $2.41 in 2008) which includes all restructuring charges.
  • The 2010 earnings expectation is $1.60 to $1.80.
  • Yearly dividend of $0.70/share appears to be well covered with earnings.
  • This payout ratio is at 47% and current dividend yield is 2.30%

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Four Stocks with Sustainable Dividends

It is important that companies continue to raise it dividend year after year. In addition, it is also critical to make sure we understand that companies can sustain their dividends. Following are four companies that recently announced their quarterly results. Based on these results, it seems their dividends are covered and can be sustained.

Procter & Gamble Company (PG): The 4Q09 earning per share was $0.80 (vs. $0.84 in 3Q09).

  • The key highlight was reduced earnings on q-o-q and y-o-y basis (vs. $0.92 in 4Q08) and reduced revenue.
  • For year 2009, EPS increased by 17% to $3.64 (from $4.26). This increase is due to sale of Folger’s business unit.
  • Yearly dividend of $1.76/share is well covered with earnings. Payout ratio is at 41%.

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Dividends Keep Inching Upwards

Among quite a few dividend raises this quarter, following were few selected ones that I was have been reading about as potential dividend growth opportunities.

Verizon Communication (VZ): The 2Q09 earning per share was $0.52 (vs. $0. in 1Q09).

  • The key highlight was reduced earnings on y-o-y basis (vs. $0.66 in 1Q08).
  • There was y-o-y growth in operating revenue (11.3%) and free cash flow.
  • Quarterly dividend of $0.46/share is barely getting covered with earnings. This quarter’s payout ratio is at 88%.

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