2 Companies Pay Rising Dividends 70%-Plus Above Sector Average Yields
By: Ned Piplovic,
Two companies pay rising dividends and have rewarded their investors with 3.1% and 4.3% yields, which exceed their respective sector averages by more than 70%.
Additionally, those two companies have been distributing rising dividends for nine and 15 consecutive years, respectively. To complement the dividend income, investors in these two companies obtained asset appreciation of at least 11.5% over the past 12 months and more than 70% over the past five years.
For this quarter, both Brookfield Infrastructure Partners (NYSE: BIP) and Maxim Integrated Products Inc. (NASDAQ:MXIM) have their ex-dividend dates on August 29, 2017 with mid-to-late September pay dates.
Brookfield Infrastructure Partners LP (NYSE:BIP)
A subsidiary of Brookfield Asset Management Inc., Brookfield Infrastructure Partners L.P. engages in the utility, transport, energy and communications infrastructure business. The company’s Utilities segment operates a port facility Queensland, Australia, using approximately 7,000 miles of electricity transmission lines in North and South America and approximately 2.8 million electricity and natural gas connections in the United Kingdom and Colombia. Through a network of about 6.500 miles of railroad tracks in Australia and South America, and more than 2,200 miles of motorways in Brazil, Chile, Peru and India, the Transport segment provides transportation, storage and handling services for freight, bulk commodities and passengers.
The company’s Energy segment offers energy transportation, distribution and storage services through approximately 9,000 miles of natural gas transmission pipelines and 300 billion cubic feet of natural gas storage in the United States and Canada. With approximately 7,000 multi-purpose towers and 3,000 miles of fiber optic cables, the Communications Infrastructure segment offers services and critical infrastructure to the media broadcasting and telecom sectors in France. Brookfield Infrastructure Partners L.P. was founded in 2007 and is based in Hamilton, Bermuda.
The current quarterly dividend of $0.435 is equivalent to a 4.3% annual dividend per share and an annualized distribution of $1.74. Over the past nine consecutive years of rising dividends, BIP boosted its annual dividend amount at an average rate of 12.8% per year. The company tripled its annual rising dividends since the $0.59 payout for 2008.
After trading relatively flat in the third quarter of 2016, the share price hit its 52-week bottom by late November 2016. However, it has been nothing but steady growth since then. The price closed at $43.09 on August 8, 2017, which is more than 40% above the November bottom.
However, despite the sharp rise over the past eight months, the share price should continue to rise. Even after $850 million-worth of expansion projects came into service over the past year, the company increased the value of its current projects investment by 20% since the beginning of the year. The company plans to approve an additional $1.5 billion to $2 billion of additional organic growth projects over the next year that will include a $300 million gas pipeline joint-venture project with Kinder Morgan.
Since almost two-thirds of the company’s earnings are immune to volume risk or fluctuation, the company’s policy of distributing 60-70% of its annual funds from operations (FFO) through dividends is easily achievable. All these factors validate the company’s belief that the organic growth and additional acquisitions will support a 5% to 9% annual distribution increase over the long term.
In the company’s quarterly financial results call on August 3, 2017, CEO Sam Pollock stated, “2017 is shaping up to be another strong year for our business, with FFO per unit up 12% year-to-date. With a significant committed backlog of organic growth projects that currently stand at $2.4 billion, and a robust pipeline of projects under consideration, we have good visibility on growth for the remainder of the year and beyond.”
Maxim Integrated Products, Inc. (NASDAQ:MXIM)
Founded in 1983 and headquartered in San Jose, California, Maxim Integrated Products, Inc. designs, manufactures and markets integrated circuits and high-frequency process technologies. The company serves automotive, communications, data center, computing, consumer and industrial markets. Maxim Integrated Products markets its products through direct-sales and through its own and other unaffiliated distribution channels.
The current 9.1% quarterly dividend payout boost raised the quarterly distribution from $0.33 to $0.36, which is equivalent to a $1.44 annual payout and a 3.1% yield. This current yield is 70% higher than the straight average sector yield and is the 15th consecutive annual dividend hike since the company started paying a dividend in 2002. Over that period, the company enhanced its annual dividend distribution 18-fold by rising the annual payment at an average rate of 21.3% per year.
The share price dropped more than 9% between mid-August and the end of November 2016 and remined flat through most of December 2016. However, between late December 2016 and late January 2017, the share price spiked almost 17%. After the sharp jump in January, the share price experienced some volatility but still managed to reach its $49.70 high for the year in early June before pulling back about 8% where it is currently trading. As of closing on August 8, 2017, the share price was $45.28, which is 10.5% higher than it was one year ago and 70% above the price from five years ago. While the share price experienced some volatility, the current long-term uptrend goes back to December 2008. Since then, the share price rose almost 300%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.