4 Dividend Champions Going Ex-Dividend in June
Karin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Dividend companies continue to be popular, both among people investing for income and among people looking for superior returns with the added bonus of a steady income stream. Investors are finally recognizing that over time, dividend-payers have historically outperformed other classes, and that much of the stock market’s overall performance can actually be attributed to the contribution of dividends.
Important dates for dividend stocks
If you're going to buy a dividend company, you want to be aware of three important dates.
The first is called the ex-dividend date; on this date, the stock will trade "ex-dividend", or without its dividend. In order to receive the dividend, you need to own the stock on the day before the ex-dividend date.
The second date is the record date, which is two business days after the ex-dividend date; purchasers must be "on record" by this date in order to receive the dividend (this is three business days, or the time it takes a stock trade to settle, after the last date that a purchaser can buy the stock and still receive the dividend).
The third date is the payment date; this is generally several weeks after the ex-dividend and record dates, and is the date on which the actual dividend is distributed.
If you own stock on the day prior to the ex-dividend date, and then sell it on or after the ex-dividend date, you will still receive the dividend on the payment date, even if you have sold the stock.
And, if you buy the stock on the ex-dividend date or after, you will not receive the dividend even if you are still holding the stock on the payment date.
June ex-dividend dates
This week, I examined over 300 stocks that are going ex-dividend in June, and have chosen four to highlight. The companies on today’s list are not necessarily ones that would be in my portfolio, but they are all terrific companies that merit a second look for any dividend investor.
All four have been paying and raising dividends for more than thirty years, all are yielding more than 3%, and they have all returned over 15% for the past twelve months.
I examined each company’s yield, total 52-week return, where it is trading relative to its 52-week high and low, and its recent dividend-paying history in order to project its ability to continue.
I present these four companies, in order of ex-dividend date:
Kimberly-Clark (NYSE: KMB) is the consumer goods giant, manufacturing and selling personal and household care items across the globe.
Kimberly-Clark is currently trading at $101 per share and yields 3.10%. It has been raising dividends for 38 years with a five-year Dividend Growth Rate (DGR) of 6.9%. It is trading at 5% less than its 52-week high of $106.54, which was reached earlier this month. (I include this information because some investors prefer to buy a stock on a pull-back from its high.) The price is up 31% since last year.
Kimberly-Clark announced its 1Q13 earnings on April 19, and beat analyst estimates by 10%, which topped 1Q2012 earnings by 19%. 2Q earnings are expected to be an increase of 9% over 2Q12 earnings. The forward-looking annual dividend is $3.24, or 57% of the earnings estimate, which is a reasonably safe payout ratio.
Kimberly-Clark will go ex-dividend on June 5 and will pay a dividend of $0.81 per share on July 2.
Leggett & Platt (NYSE: LEG) manufactures residential home furnishings components, and is actually one of the companies in my Perfect Dividend Portfolio. I analyzed and selected it in March, and you can read here why I did so.
Leggett & Platt has been paying and raising distributions consistently for 41 years. It yields 3.50% and its five-year dividend growth rate is 6.1%. Leggett & Platt is trading at $33 per share, up 59% from a year ago, and just off its 52-week high.
The stock goes ex-dividend on June 12 and will pay a dividend of $0.29 per share on July 15.
Cincinnati Financial (NASDAQ: CINF) is a property casualty insurance company that operates in the United States.
Cincinnati Financial is currently trading at $47 per share and yields 3.40%. It is trading at 5% less than its 52-week high, and the share price is up by 34% over the past twelve months.
The company announced 1Q 2013 earnings on April 25 and beat analyst estimates by 18%. It has beat expectations every quarter for the last four quarters by an average of 65%.
Cincinnati Financial has been raising its dividend for 52 years, and its payout ratio is 54%. Its five-year DGR is 2.6%. The stock goes ex-dividend on June 17 and will pay its dividend on July 15.
Air Products & Chemicals (NYSE: APD) provides gases and chemicals for many different manufacturing industries, including healthcare, food processing, and the energy industries.
The company is currently trading at $94 per share and yields 3%. It is trading just off its 52-week high. The share price is up 19% from this time last year.
The company has been increasing its dividend for 31 years, and its five-year DGR is 10.8%. The forward dividend is $2.84, 52% of the current forward earnings estimate for 2013.
The stock goes ex-dividend on June 27 and will pay a dividend of $0.71 on August 12.
At this point, I am not prepared to add any additional companies to my dividend portfolio, since I am not yet finished building the base. I’ve chosen ten companies, and I am currently planning to reinvest dividends into those ten for an indefinite time.
If I were ready to add to my current selection, though, I would definitely consider all of the companies on this list. These companies represent what I feel is a fair risk-reward basis in terms of a dividend-paying company. They look to be solid companies, extremely committed to paying and growing dividends at an above-average rate, with good forward earnings potential. They may merit a position in your income portfolio.
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Karin Hernandez is long Leggett & Platt. The Motley Fool recommends Kimberly-Clark. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!