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EQT Corporation (EQT), News Corp (NWSA), Mastercard Inc (MA): Do These Low-Yielding Companies Have Room for Dividend Growth?

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Recently, I looked at three companies in the S&P 500 which offer shareholders some of the lowest dividend payouts in the index to try and establish if there was any possibility that these companies could increase the dividends that they currently offer to investors.

The problem is that only one out of the three companies I reviewed originally actually had the potential to increase its payout.

So, in an effort to try and find more companies with potential to increase their dividend payouts, here are three more of the lowest yielding stocks in the S&P 500.

EQT Midstream Partners LP (NYSE:EQM)

EQT Corporation (NYSE:EQT)

Metric Q2 2012 Q3 2012 Q4 2012 Q1 2013
Net Operating Cash Flow $196 $251 $150 $305
Net Investing Cash Flow -$391 -$360 -$375 -$304
Cash Available for Financing Activities -$195 -$109 -$225 $1
Dividends Paid $33 $33 $33 $4.5
Change in Capital Stock $0 $276 $0 $0
Issuance/Reduction of Debt $0 -$11 -$200 -$20
Free Cash Flow -$229 $142 $258 $3.5
Dividend Cover from Cash Available for Financing Activities 0x 0x 0x 0.2x

Figures in $US Millions. Financing activities include dividend payouts, changes in capital stock, and the movement of debt.

First up is EQT Corporation (NYSE:EQT). The company cut its dividend payout in the first quarter of this year and now offers investors a dividend of $0.03 a quarter, down from $0.22 a quarter previously, which it had been returning to investors uninterrupted since 2006. EQT has an annualized dividend yield of 0.15%.

It would appear that even after its recent cut, EQT Corporation (NYSE:EQT)’s dividend is still not covered by operating cash flow after the deduction of investing activities. In addition, it would appear that for the last four quarters, EQT Corporation (NYSE:EQT) has not been able to cover its investing activities, such as CAPEX, with operating cash flow, indicating that the company’s cash flow is under a lot of pressure, leaving little room for maneuverability or to increase the company’s dividend payout.

So, based on that, I believe EQT Corporation (NYSE:EQT) has no room to improve its dividend payout to shareholders.

Verdict: no growth potential

News Corp (NASDAQ:NWSA)

Metric Q2 2012 Q3 2012 Q4 2012 Q1 2013
Net Operating Cash Flow $1,070 $710 $261 $1,790
Net Investing Cash Flow -$434 $1,460 -$3,460 $612
Cash Available for Financing Activities $636 $2,170 -$3,199 $2,402
Dividends Paid $270 $52 $245 $87
Change in Capital Stock -$1,220 -$766 -$529 -$369
Issuance/(Reduction) of Debt ($3) $988 ($236) ($464)
Free Cash Flow $511 $482 -$178 $1,450
Dividend Cover from Cash Available for Financing Activities 2.4x 42x 0x 27x

Figures in $US Millions. Financing activities include dividend payouts, changes in capital stock, and the movement of debt.

Offering a dividend payout of $0.18 annually, News Corp (NASDAQ:NWSA) has an annualized dividend yield of 0.56% and it would appear that the company has room to increase its payout.

On average, during the last four quarters, News Corp (NASDAQ:NWSA)’s dividend payout has been covered around 24 times by operating cash flow after the deduction of investing activities. In addition, the company has been able to buy back stock and reduce debt with the additional cash it has on hand.

Based on News Corp (NASDAQ:NWSA)’s well covered dividend, stock buybacks, and debt reduction activities I believe that the company has plenty of room to increase its dividend payout to shareholders

Verdict: plenty of near-term dividend growth potential

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