Dividend Increase and Special Dividend – CBRL

Cracker Barrel Old Country Store, Inc (CBRL) released their results this morning and reported great results with increase in revenue and profits. Revenue increased by over 6% YoY. It also reported over 5% increase in same store sales. The company also increased their full year forecast. The stock is up more than 4% today after the results.

In addition to that, it announced a new quarterly dividend of $1.10 up from the current dividend of $1.00. This represents a 10% increase. The new dividend is payable on August 5th with a ex-div date of July 15th. The new dividend represents a yield of 3.00% based on current price. I hold 15 shares and this increases by projected annual dividends by $6.00, from $60.00 to $66.00.

The company also announced a special dividend of $3.00 to be paid along with the quarterly dividend. This should provide a boost of $45.00 to my dividend income this year.

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Two contrasting Dividend Increases

Two companies that I hold positions increased the dividends this week. The dividend increases were contrasting and in opposite sides of the spectrum.

  • Procter & Gamble Co (PG) announced a 3% increase to a quarterly dividend of $0.6629 compared to the previous quarterly dividend of $0.6436. The increase represents a projected annual dividend of $2.5744 which results in 3.12% forward yield. While this is a nice yield, PG has been struggling recently due to slowing or retracting growth and currently headwinds. While dividends have been increased each year and PG maintains its dividend champion status, the payout ratio has been increasing too due to lack of EPS growth. This is a real concern and doesn’t leave much room for future dividend growth without EPS growth coming back. The stock is also priced higher right now at a P/E of over 21. I am looking forward to seeing the quarterly results to be announced next week.
  • Kinder Morgan Inc (KMI) also announced an increase this week. The quarterly dividend increased to $0.48 compared to the previous quarterly dividend of $0.45. This results in an increase over 6%. The quarterly results were mixed, but the dividends were easily covered by the earnings. The current quarterly dividend of $0.48 results in a good 4.37% yield. But, the company also reaffirmed its target of $2.00 in annual dividends in 2015 which means more dividend increases on the way for the next two quarters.

Disclosure: Long on both stocks mentioned above.

Dividend Increase – HPQ

HPQ announced a new quarterly dividend of $0.176 up from $0.16. This represents a 10% increase. The increased dividend is payable from July this year. The new dividend represents a yield of 2.15% based on current price. I hold 205 shares and this increases by projected annual dividends by $13.12, from $131.20 to $144.32.

HPQ is not a typical dividend income stock. I got the stock way back primarily as a growth stock. HPQ’s share price has dropped significantly in the last couple of months from touching a high of about $40 to little over $32 now.  HPQ has announced its plan to split into two companies (one focused on PCs and Printers and another focused on IT services) and this is supposed to happen later this year. Will have to wait and see what dividends are going to be paid going forward.

Dividend Increase – GE

GE announced a new quarterly dividend of $0.23 up from $0.22. This represents a 4.5% increase compared to last year. The new dividend represents a yield of 3.69% based on Friday’s closing price of $24.89.

GE is the largest holding in my portfolio. I hold 375 shares and this increases by projected annual dividends by $15.00, from $330.00 to $345.00. The share price has been under pressure for a while now and it has been hovering between $24 and $27 for a long time. My last GE purchase was at $25 and seeing the current price below that is tempting. But I probably will not add since GE is already the largest in my portfolio and I would like to add to my other holdings to balance the weight.

Even though the dividend increase is not great, it is better than nothing. With the stock price under pressure, I was not sure if there would even be an increase.

Dividend Increase – KMP

KMP (Kinder Morgan Energy Partners) announced a new quarterly dividend of $1.39 up from $1.38 last quarter and up from $1.32 from last year. This represents a 5.3% increase compared to last year. The new dividend represents a yield of 6.75% based on today’s closing price of $82.35. They have also increase their dividends multiple times a year for the past few years.

I purchased KMP back in March this year as a speculative position because of their high yield. The results announced today missed on earnings, but beat on revenue. Hopefully they are able to continue to grow their profits and also their dividends.