In a previous article I wrote that there are three types of dividend stocks. The first type includes high yielding stocks which seldom raise dividends. This type of stocks is more suited towards investors seeking current income, since distributions will not keep up with inflation over time. The second type of dividend stocks is one in the sweet spot, where strong earnings growth and average dividend yield would ensure high yield on cost in a few years in addition to decent total returns. The third type of dividends stocks is the type with the lowest yields, but the highest dividend growth. The last two are favorites among investors who want to generate income in retirement that keeps up with inflation. Furthermore the last two types of dividend stocks should do well over long periods. There are pros and cons of overly relying on any one group however, which is why creating a blended portfolio is a good strategy to employ.
When analyzing the dividend increases announced for the past week, I noticed that the data confirms my expectations. Most of the higher yielding stocks that announced dividend increases have had slow distributions growth, with some exceptions. Master Limited Partnerships seem to be on a roll this month. After dominating the list of distribution increases for the past few weeks, MLP's are still a noticeable phenomenon among dividend raisers:
BreitBurn Energy Partners L.P. (NASDAQ: BBEP) engages in the acquisition, exploitation, and development of oil and gas properties in the United States. This master limited partnership raised distributions by 2% to 38.25 cents/unit. The partnership suspended distributions in 2009 and reinstated them back in 2010. Yield: 9.80%
Williams Partners L.P., (NYSE: WPZ) a diversified master limited partnership, focuses on transporting; gathering, treating, and processing; storing natural gas; and natural gas liquid fractionating and oil transporting activities. The partnership raised distributions by 2-percent over the partnership's first-quarter 2010 distribution of $0.6575 per unit and a 6-percent increase over the partnership's second-quarter 2009 distribution of $0.635 per unit. This MLP has raised distributions since 2006. Yield: 5.80%
Boardwalk Pipeline Partners, LP, (NYSE: BWP) through its subsidiaries, engages in the interstate transportation and storage of natural gas in the United States. The company raised distributions by 1% to 51 cents/unit. This MLP has consistently raised distributions since 2006.Yield:6.60%
Alliance Holdings GP, L.P., (NASDAQ: AHGP) through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. This MLP raised its quarterly distribution to 48.25 cents/unit. This MLP has consistently raised distributions since 2007. Yield: 5.10%
Suburban Propane Partners, L.P.