The run-up to the holiday season continues to bestow gifts on income investors. As it's been in recent weeks -- and throughout 2017, come to think of it -- the business-news ticker was busy with news of dividend raises from noted stock market names.
Three of the more prominent ones for the period were Boeing (NYSE: BA), AT&T (NYSE: T), and Waste Management (NYSE: WM). Let's take a glance at each of their increases.
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It's hard to avoid soaring-in-the-air analogies when talking about the new dividend from top aircraft maker Boeing. The company is raising its quarterly payout a mighty 20%, to $1.71 per share. It's also launching a new $18 billion share-repurchase program.
Lately, the company's revenue has seen an uptick thanks to an increase in aircraft deliveries. Although profitability was down -- $1.85 billion in Q3, against $2.28 billion in the same period last year -- the lower figure was due to a large, one-off tax gain in the 2016 frame.
Meanwhile, a spate of recent orders bodes well for Boeing's continued improvement in fundamentals. Also, the rise in deliveries has goosed operating and free cash flow; FCF in Q3 saw a sturdy 15% year-over-year rise to almost $3 billion. That's sufficient to cover the company's dividend payout and its recent series of share buybacks. It's a conservatively managed company, so we can expect it to maintain that dynamic.
Boeing's upcoming distribution will be paid on March 2 to stockholders of record as of Feb. 9. Its payout ratio is 63%, while it would yield 2.3% on the most recent closing stock price. The latter compares favorably with the current 1.8% average yield of dividend-paying stocks on the S&P 500.
The stock-buyback initiative replaces an existing program. Although Boeing didn't specify an end date for it, the company did say that it expects its repurchases "will be made over the next 24 to 30 months."
Well known as a comparatively high-yield stock investment, telecom incumbent AT&T is supporting that figure with a modest increase. It just declared that its next quarterly dividend will be $0.50 per share, $0.01 or 2% higher than before.
The company, by the way, is a Dividend Aristocrat. This will be the 34th year in a row it has bumped its regular payout higher.
The incremental raise was perhaps justified, given recent results. AT&T's Q3 revealed continued customer losses, with a net 97,000 postpaid phone subscribers and 251,000 DIRECTV customers ditching their services during the quarter. Not surprisingly, both revenue and net profit fell, by a respective 3% and 9% to $39.67 billion and $3.03 billion. Both were slightly below the average analyst estimates.
That was the bad news. The good is that the company is still well in the black and continues to be a cash-generating machine. Cash flow is robust and lately has been more than enough to cover that generous dividend and the most recent share buybacks.
The company will probably continue having to fight customer erosion, but it should remain a profitable and cash-generating giant nonetheless. The company's long-simmering attempt to merge with Time Warner is meeting plenty of resistance from the feds, so we can't yet factor that into our consideration of its ability to fund the payout.
AT&T is handing out its new dividend on Feb. 1 to shareholders of record as of Jan. 10. It yields a theoretical 5.2%, while its payout ratio is 68%.
Waste Management, the most prominent trash hauler on the market, is about to add 9% to its shareholder distribution. The new quarterly dividend will be just under $0.47 per share. The company also announced a new $1.25 billion share-buyback program.
These declarations come not long after Waste Management released encouraging Q3 results. The company's revenue rose by 5% to $3.72 billion, with adjusted net profit advancing at a 6% clip to $398 million. This was attributed to a rise in volume and prices in certain aspects of the company's business, such as recycling.
It believes these factors will remain in force and accordingly adjusted its fiscal 2017 earnings and free cash flow guidance upward. It's now projecting that per-share net profit will come in between $3.19 and $3.21, with free cash flow of $1.70 billion to $1.75 billion. Those numbers were $2.65 per share and $1.62 billion, respectively, in fiscal 2016.
Waste Management typically posts a profit and lands well in the black in terms of operating and free cash flow. That habit, plus the company's reasonable optimism for the future, leads me to believe that it'll be able to raise the dividend again before too long.
Waste Management hasn't yet determined the record and payment dates of its upcoming distribution, the payout ratio of which is 52%, entirely in line with the company's long-term goal. The new distribution would yield 2.2% on the current share price.
The company did not specify an end date for the new stock repurchase program.
It ain't over till it's over
For income investors, there's no such thing as too many dividend raises. Luckily for them, raise-heavy 2017 isn't finished yet. These aren't the final increases for the year, by any means.
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