Dividend Increases For Tuesday, May 29th – Niche Income Opportunities
Welcome Back! I hope all of you in the US enjoyed your three-day weekend and the quasi-official start of summer for those of us in the northern hemisphere.
The Niche and The Wide Moat
This morning we’re welcomed back with 6 dividend increases by a good variety of companies that operate in some niche markets. I tend to favor companies like this that specialize in a single product or service, because often times they have a “wide moat”, meaning it is very difficult for competitors to enter their product space and compete effectively. The more important thing is that these companies are often extremely profitable and thus increase their dividend payouts to share holders regularly. Often times you’ll find that these niche players have large insider ownership often by the founding family who relies on the income stream the dividend payments provide, so the principals and majority shareholders may encourage the Board of Directors to keep the dividend increases coming as long as the business cashflow will support it.
You’ll find the complete list of dividend increases listed below, or you also click this link to get online spreadsheet with all the numbers for today’s dividend changes.
I’ve started to put together the 2012 year-to-date spreadsheet that will give you a big picture view of all the dividend increases for the year.
The Daily Round-Up
Bancorp South Capt Trust (ticker: BXSpA) These are the preferred A shares of BXS which operates as a financial holding company for BancorpSouth Bank and provides commercial banking & financial services to individuals and mid- size businesses in 9 states. With today’s increase the shares are yielding ~ 7.8%.
Bunge Ltd (ticker: BG) operates a number of subsidiaries, which engage in the agriculture and food business worldwide. BG had a dividend increase of $.02 to $..27/quarter with a new yield of 1.8%
Cato Class A (ticker: CATO) operates as a specialty retailer of fashion accessories and apparel within the Southeastern US. CATO raised their quarterly dividend by $.02 to $.25 which will yield investors 3.4%
FedFirst Financial (ticker: FFCO) operates as a holding company for First Federal Savings Bank, providing banking and financial services to individuals and businesses primarily in southwestern Pennsylvania. FFCO raised their dividend by 25% to .04/quarter from .03/quarter for an estimated yield of 1.1%
HJ Heinz (ticker: HNZ) manufactures and markets food products for consumers, and foodservice and institutional customers in worldwide, primarily offering ketchup, condiments, soups and sauces, since founding in 1869. HNZ increased their quarterly dividend to $.515/quarter giving a new yield of 3.9%
Munro Muffler Brake (ticker: MNRO) was started in 1957 and provides automotive undercar repair, muffler, exhaust and tire services, primarily for passenger cars, light trucks, and vans. Today’s 10% increase in the dividend to $.10/quarter brings MNRO’s yield to 1.2%
|Bancorp South Cap Trust||BXSpA||7.8%||.5094||.50938||Quarterly|
|Cato Class A||CATO||3.4%||.25||.23||Quarterly|
|Munro Muffler Brake||MNRO||1.2%||.10||.09||Quarterly|
As always when evaluating investment opportunities it’s important to keep in mind not only the fundamentals of the stock itself, but also how the holding entity (Limited Partnership,Royalty Trust, Master Limited Partnership, Business Development Company, Preferred Stock) may affect the way you report income on your annual tax return as well as the amount or percentage of tax you will be required to pay.
Keep in mind that adding shares of any of these special entities to tax deferred / retirement accounts may also present additional issues.
Remember to review all of the fundamentals of any company BEFORE investing – you shouldn’t simply buy a stock based on the dividend payout. If you have further questions about any stock mentioned her you should first consult with your CPA or tax planner / adviser before making any investments.