I invest in companies that have a long track record of annual dividend increases. This is usually a result of a strong business model, that is fueled by earnings growth. I try to build a diversified portfolio of dividend growth stocks over time, and try to avoid overpaying for investments.
One of the ways to monitor dividend growth stocks is by checking the dividend increases. A company that has a culture of regularly raising dividends, is very likely to continue raising them. A company with a culture of regular annual dividend increases that reduces dividends is sending a signal that something has changed. Either way, it is important to monitor the fundamental position of the enterprise, in order to determine if dividends are sustainable, and if further dividend growth is probable.
There were four companies that raised dividends over the past week. Each one has managed to boost dividends for at least a decade. The companies include:
Enterprise Products Partners L.P. (NYSE:EPD), a master limited partnership, provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. This master limited partnership raised its quarterly distribution to 40.50 cents/unit. This represents a 5.20% increase over the distribution paid at the same time last year. Enterprise Products Partners L.P. (NYSE:EPD) is a dividend achiever, which has managed to increase distributions for 18 years in a row. Over the past decade, Enterprise Products Partners L.P. (NYSE:EPD) has managed to boost distributions at a rate of 6.20%/year. This MLP is one of the most conservative ones out there. The distributions have a built in margin of safety, because the partnership saves a portion of cash flow to reinvest in projects. The partnership also offers a 5% DRIP discount to unitholders who elect to reinvest distributions through its DRIP plan.
One reason why investors do not like to buy MLPs is due to the fact that reporting is more complicated with pass through entities than with regular 1099 forms. In addition, not many brokers allow you to purchase MLPs in your retirement accounts.