BALTIMORE (Stockpickr) -- It's earnings season, and that means dividends. Don't follow? While most investors think of earnings season as the time when companies announce their quarterly numbers, management tends to take advantage of Wall Street's attention by announcing dividend actions during the same time.
That's good news for investors, after all dividends are a big deal.
Historically, companies that pay higher dividends materially outperform those that don't. In the last 36 years, dividend stocks outperformed the rest of the
by 2.5% annually. And they outperformed nonpayers by nearly 8% each and every year, according to a study from NDR. That means that when a company actually increases its dividend, investors would do well to take notice.Here's a look at the
Midstream energy company
Enterprise Products Partners
provides products and services to producers and consumers of oil, natural gas and petrochemicals. From a business structure standpoint, EPD is a master limited partnership -- a publicly traded partnership that's designed to pass on massive dividends to shareholders (the partners in the business). And the company does just that. Last week's dividend hike puts the quarterly payout per share at 56.75 cents, a yield of 6.29%.
Enterprise Products Partners is one of the best midstream energy plays, with a sizable chunk of the market and a stable bed of hard assets to fall back on during commodity slumps. With an increasing focus on North American natural gas production in 2010, the company should be one of the biggest beneficiaries of the added volume -- perhaps even more so than the natural gas E&Ps themselves. Ultimately, the stock is a stable business that produces tons of cash and should continue to deliver its generous dividend for years to come.
One fund that's certainly betting on that scenario is the
(KYE), an $811 million fund that also owns stakes in
Another high-yielding master limited partnership that increased its dividend payout last week was
Plains All American Pipeline
, a Texas-based oil and gas transportation and storage company that reports its earnings numbers on May 5. Plains increased its payout to shareholders to 93.5 cents per share, giving the stock a generous 6.28% dividend yield at current levels.
Essentially, Plains All American Pipeline has a business model that can be boiled down to one goal: move commodities to the people who need them. In the past, that's meant moving crude oil to refiners in the Midwest. In recent years, however, the company has expanded its focus, increasing its geographic footprint and its carried commodities. Now, with significant assets on its balance sheet, Plains is in a place where it can comfortably produce recurring cash flows whether commodities are moving or not - a rare ability in the oil and gas servicer industry.
Among the company's institutional owners is
, which also owns shares of
United Parcel Service
Engineering subsystem producer
has made a big business out of the little things. The company focuses on engineering value-added motion systems for vehicles and machines. While that business certainly isn't the flashiest, it's proved to be extremely profitable -- at least enough to justify a 4% dividend increase, pushing quarterly payouts to 26 cents per share. That gives Parker-Hannifin a current dividend yield of 1.48%.
By focusing on the little things for its clients, Parker has all but ensured that management would have a tight handle on its little things as well. As a result, the company sports always-increasing efficiency -- and respectable margins. With a highly diversified client base and strong margin growth, expect Parker's value to continuously improve.
That's the investment synopsis they're seeing for Parker Hannifin at the
(NAMAX), which holds Morningstar's three-star rating and owns stakes in
Discover Financial Services
For the rest of this week's dividend stocks, check out the
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-- Written by Jonas Elmerraji in Baltimore.
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Jonas Elmerraji is the editor and portfolio manager of the
Rhino Stock Report
, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including
, and has been featured in
Investor's Business Daily