The 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.
- It is a dividend achiever has paid growing dividends for last 15 years. Most recent dividend increase of 3.7% was in December 2009. The quarterly dividend is $0.28 per share
- The 3Q09 earning per share was $0.30 including impact of acquisition.
- The key highlight was improving operating profits and net earnings because of controlling cost and cost savings initiatives.
- The cash flow improved to $231 million for first nine months.
- Annual dividend of $1.09 per share appears to be barely covered by the earnings. The cash flow and reserves provide some room for flexibility.
- This payout ratio is more than 80% and current dividend yield is 2.00%.
McCormick & Company Inc. (MKC): MKC is a specialty food company, engages in the manufacture, marketing, and distribution of flavor products and other specialty food products to the food industry worldwide. Its products include spices, herbs, extracts, seasoning blends, sauces, marinades, and specialty foods. Their customers are direct retail consumer and industrial business houses. The company was founded in 1889 and has headquarters in Sparks, Maryland.
- It is a dividend achiever and has been increasing dividends for more 24 years. The most recent dividend increase of 8.3% was in November 2009. The quarterly dividend is $0.26 per share.
- It has paid dividends since 1925, and dividends have tripled in last 10 years.
- The 3Q09 earning per share was $0.57 (vs. $0.52 in 3Q08).
- The key highlight was increased earnings due to combination of acquisition, tad higher sales, and cost reduction initiatives.
- The year 2009 earnings per share is estimated to be $2.26 to $2.28
- The yearly dividend of $1.04 per share appears to be well covered with expected earnings for year 2010.
- The payout ratio is approximatley 46% and current dividend yield is 2.6%.
Graco Inc. (GGG): It is provider of fluid handling systems and components and its products are used to move, measure, control, dispense, and spray a wide range of fluids in Industrial, Contractor and Lubrication applications. The company was founded in 1926 and has headquarters in Minneapolis, Minnesota.
- This company has been increasing dividends for last 10 years. It will most likely be added to Dividend Achievers list in 2010. The most recent dividend increase of 5.0% was in December 2009. The quarterly dividend is $0.20 per share.
- In last 10 years, the annual dividends have increased from $0.13 per share to $0.80 per share.
- The 3Q09 earning per share was $0.29 (vs. $0.54 in 3Q08).
- While the operating cash flow (for y-o-y) is steady at approximately $110 million, the key lowlight is the significant reduction in earnings in year 2009.
- The yearly 2009 earnings is expected to significantly less than year 2008.
- It is likely that the yearly dividend of $1.00 per share would not be covered by the earnings. However, cash flow and reserves provide some flexibility.
- This year’s payout ratio would be more than 75% while the current dividend yield is 2.6%.
These three companies are from two different markets viz., food industry and industrial, which show businesses focusing on core competency have resilience to wither recession and US companies are being run profitability.