Dull as Dishwater=Dazzling Dividends
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
There are four companies that aren’t hot, hot, hot-indeed, you might call them dull as dishwater, that have consistently raised dividends for 56 years. These are Genuine Parts Company, Procter & Gamble, Northwest Natural Gas, and Parker-Hannifin. Not exactly names that are on the tip of investors’ tongues but maybe should be, especially those looking for yield.
The Dishwater Name
The one you are probably most familiar with is Cincinnati based Procter & Gamble Co. (NYSE: PG) which pays a 3.2% dividend (at a 58% payout ratio) and surprise-it just hit a 52-week high on September 25 intraday. The P/E is now 19.09 with the forward P/E at 16.54 below the industry average of 21.25.
The consumer packaged goods giant operates in 180 countries. P&G operates in 5 main segments- all of which with products you use or know- Beauty with Olay, Head & Shoulders, Pantene and Wella, Grooming with Gillette, Braun and Mach3, Health Care with Oral-B, Crest, Vicks and Always, Fabric Care and Home Care with Febreeze, Tide, Iams pet food, Duracell, and of course Dawn dish detergent, and finally the Baby Care and Family Care segment with baby wipes and Pampers.
Analysts and pundits have been down on the name lately and the quarterly revenue growth at -1.20% is nothing to write home about, but quarterly EPS growth is 44.70%. The company has been struggling with commodity costs as well as competition from Church & Dwight, Unilever, Johnson & Johnson, and Kimberly-Clark. The stock has underperformed the S&P 500 only up 11% over 52 weeks. Still, the stock has a low beta of .28.
P&G reports again on October 22. Earnings have been ho-hum for several years. Bill Ackman’s hedge fund, Pershing Square Capital Management, recently bought $2 billion worth of Procter & Gamble shares. It’s quite likely the famed activist investor will call for some shake-ups to unlock investor value.
Genuine Returns
Another stellar dividend name is Genuine Parts Company (NYSE: GPC) with a 3.2% yield (payout ratio of 49%) and a P/E of 16.27. Genuine Parts Company distributes wholesale automotive and industrial replacement parts, office products and electric/electronic materials in the U.S., Puerto Rico, and Canada.
You’ve probably heard of the NAPA automotive brand. That’s them as well as industrial products for food and beverage, mining, oil and gas, petrochemical, and pharmaceutical industries under the subsidiary name Motion Industries.
Quarterly earnings growth isn’t bad at 11.1% but quarterly earnings growth is only 4.8%. This name does provide exposure to a great many industries that should do well as the economy slowly picks up.
The retail auto parts names have been on fire these last few years but Genuine Parts, with its wholesale auto parts, not so much probably because of its large industrial exposure and not being a pure play on consumers fixing cars rather than buying cars.
One other thing that investors might like is that Genuine Parts was named to the top 25 socially responsible dividend stocks by Dividend Channel. Those who like the yield of cigarette maker Altria but balk at investing in a tobacco company have a good alternative here.
Park it With Parker Hannafin?
Parker Hannifin Corp (NYSE: PH) is a manufacturer of motion control products mainly for automobiles, airplanes, tractors and machine tools and thus is a good barometer of the health of the industrial economy. While their North American orders are growing they are only growing by low single digits. The Institute for Supply Management index has slipped below 50 of late, a sign of slowing industrial growth, but Parker Hannifin is a global supplier and these North American indicators only show a part of the picture.
Investors still seem to like this name with its 1.9% yield (at a 21% payout ratio) and 11.17 P/E. This is one of those names with so many moving parts (literally, all those pumps and valves) that it's hard to gauge its performance by macroeconomic indicators. The company reports on October 18.
Even if the overall industrial economy slows this name with its defensive and ever growing dividend can weather most market storms.
Finally, we have a name you’ve probably never heard of, Northwest Natural Gas Company (NYSE: NWN). It is a utility which stores and distributes natural gas primarily in Oregon, Washington, and California. This one has the highest yield at 3.6% and a P/E of 20.88.
On their August 3 earnings call for Q2 CEO Gregg Kantor said because of lower and stable natural gas prices that income from storage was flat. Also net income per share was $0.05, down from $0.08 per share in the year ago period, which he said was due to warmer weather.
Like most utility stocks, its success can be heavily dependent on weather and public utility commissions. That said, it has been a dependable dividend raiser for 56 years. Despite its large dividend it has the largest short interest of these four names at 6.5%.
Are you still with me? Yes, pretty dull but of such stuff are dazzling dividends created. Whether you are interested in a consumer staple, natural gas utility, industrial manufacturer, or a parts wholesaler these are the names which won’t let you down, but will lift up your portfolio for years to come.
leglamp has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend The Procter & Gamble Company. 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.If you have questions about this post or the Fool’s blog network, click here for information.
