This Alert is a recap of some of the major dividend increases this week.
Duke Energy (DUK) raised its quarterly dividend on July 7 to $0.825 a share (4.5% yield). Investors at the close of trading on Aug. 11 will qualify for the payment on Sept. 16. The North Carolina-based utility has increased its payout consistently over the past several years and can cover the dividend with 67% of expected 2016 earnings per share of $4.93. The company's payout is toward the high end of the industry range.
The stock has lagged year to date, falling 11% and closed Thursday at $74.07. Even so, Duke Energy has a stable balance sheet and operates in an area of the country that's experiencing above-average economic growth. While we prefer Southern (SO) in the Dividend Stock Advisor model portfolio, Duke also appears attractive at an initial glance.
Paccar (PCAR:Nasdaq) boosted its quarterly dividend on July 7 to $0.24 a share (1.5% yield). Investors at the close of trading on Aug. 11 will qualify for the payment on Sept. 4. The truck manufacturer's payout is below the average yield on the S&P 500 index, though management has augmented its dividend with a one-time payment in December, including $1 a share in 2014, each of the past five years. Paccar can cover the new payout, including another potential special dividend, 2.4x with expected 2016 EPS of $4.71.
The stock has lagged the broader market year to date, losing 7% and closed Thursday at $62.90. We'd prefer to focus on industrial names with better dividend growth potential.
Paychex (PAYX) increased its quarterly dividend 11% on July 9, to $0.42 a share (3.5% yield). Investors at the close of trading on July 29 will qualify for the payment on Aug. 20. The company has raised its payout five straight years, and yields a full 110 basis points more than its chief competitor, Automatic Data Processing (ADP:NYSE).
However, Paychex can cover the dividend just 1.2x with expected fiscal (ending June) EPS of $2.01. We prefer to see a non-utility company exhibit at least 2x earnings coverage before we deem a payout secure.
Here are some notable upcoming must-own dates in the next week:
July 10 -- AbbVie (ABBV), Abbott Laboratories (ABT) and Freeport-McMoRan (FCX).
July 13-- Aetna (AET).
July 14 -- EOG Resources (EOG), Foot Locker (FL) and Yum! Brands (YUM).
July 15 -- Caterpillar (CAT) and Hormel (HRL).
This commentary originally appeared in Dividend Stock Advisor. Click here to learn more.