ConocoPhillips’ Grissik Gas Plant, Indonesia
Courtesy of ConocoPhillips
The torrent of dividend increases for U.S. companies continued this week, with ConocoPhillips , CME Group , and Prudential Financial among the latest examples.
Energy exploration and production giant ConocoPhillips (ticker: COP) said it will pay an ordinary dividend of 46 cents a share and a second-quarter variable return of cash of 30 cents a share. That’s a 50% increase from the previous variable return of cash of 20 cents a share.
Due to the volatility companies, more energy companies have been embracing variable dividends as a way to manage their return of capital to shareholders through an economic cycle.
ConocoPhillips stock yields 2%. It had a one-year return of nearly 120% as of Thursday’s close, dividends included, compared with about 19% for the S&P 500.
CME Group (CME), whose portfolio includes a variety of futures and options products, declared a quarterly dividend of $1 a share, up from 90 cents previously. The company has regularly paid a special dividend, most recently last month when it distributed $3.25 a share. The stock has a one-year return of about 30%, and it yields 1.5%.
Insurer and asset manager Prudential Financial (PRU) is raising its quarterly payout to $1.20 a share, increase of 5 cents, or about 4%, from $1.15. The stock, which yields 4.1%, has a one-year return of around 47%.
Cigna (CI) is planning to boost its quarterly dividend by 12%, or 12 cents, to $1.12 a share from $1. The health-services company’s stock, which yields 2.1%, has a one-year return of about 1%.
Air Products & Chemicals (APD), which supplies industrial gases and related equipment, declared a quarterly payout of $1.62 a share, an increase of 8% from $1.50. The stock, whose one-year return is about 4%, yields 2.5%. This marks the 40th straight year in which the company has raised its quarterly dividend.
Intercontinental Exchange (ICE) declared a quarterly dividend of 38 cents a share from 33 cents for an increase of 15%. The stock, which yields 1.2%, has a one-year return of about 12%. Its various businesses include the New York Stock Exchange.
Bath & Body Works (BBWI) said it plans to pay a quarterly dividend of 20 cents a share, up from 15 cents for a boost of 33%. That equates to an annual dividend of 80 cents a share versus 60 cents currently. The stock, which has a one-year turn of about 58%, yields 1.4%.
Corning ( GLW
), which makes specialty glass, ceramics, and fiber, is planning to boosts its quarterly dividend to 27 cents a share, a 12.5% increase from 24 cents. The stock, which yields 2.6%, has returned about 20% in the past year.
Meanwhile, January was a pretty busy month for S&P 500 dividend increases, though it trailed such activity in the corresponding period of 2020 before the pandemic took hold.
S&P Dow Jones Indices recorded 33 dividend hikes last month for companies in the index. That compares with 33 dividend increases in January 2021, 41 in January 2020, and 36 in January 2019.
Several stood out in the latest January for the size of their increases. The board of Tractor Supply (TSCO), which operates more than 2,000 stores catering to customers in rural areas, declared a quarterly dividend of 92 cents a share, up 40 cents, or nearly 80%, from 52 cents currently.
This past week, United Parcel Service (UPS) was pretty aggressive as well, declaring a quarterly dividend of $1.52 a share, a boost of nearly 50% from $1.02 and the largest quarterly dividend boost in the shipper’s history.
Clearly, UPS is bullish on its prospects, high inflation, and supply-chain headwinds notwithstanding. Analysts polled by FactSet expect the company to earn an adjusted $12.79 a share this year, up about 5% from 12.13 in 2021, so the dividend is set to grow a lot faster than the earnings are this year.
A review of several analysts’ takes on the latest earnings results did not reveal any concerns about the dividend being too aggressive, however.
“Disciplined capital deployment, improved free cash flow and [return on invested capital], and balance sheet improvement put UPS on more solid footing and benefit valuation,” observed BMO Research note this week. The stock, which yields 2.7%, has a one-year return of about 46%.
Write to Lawrence C. Strauss at [email protected]
