Tuesday, September 4, 2012

Dividend Income increases with MDU Resources

Dividend Machine for week of 9/3/2012 MDU Resources

This week’s dividend machine is MDU Resources.  MDU made the 2011 dividend machine list as well.  MDU Resources, symbol (MDU) is in the business of natural resource products and related services needed for energy and transportation infrastructure.   MDU is an industrial company; the kind of company that America is built upon.

Look at these company provided statistics and you will see why MDU has made the dividend machine list for the second year in a row.

  • Diversified asset-based natural resource company
  • Solid balance sheet with equity of 63% of total capital as of June 30, 2012
  • Ten-year total annual shareholder return of 9% at June 30, 2012
  • 74 consecutive years of uninterrupted quarterly common stock dividend payments
  • Dividend increased in November 2011, marking the 21th consecutive year of dividend increases
  • Member of S&P MidCap 400 Index
              How does MDU stack up using our four dividend machine criteria?  If you own MDU by September 16, 2012, you will receive the quarterly dividend of $.1675 on October 1, 2012.   Using the Friday, August 31 closing price of $21.55, the annual yield is 3.1% which is just above our minimal yield of 3%.   MDU has increased the dividend every year for 19 years.   During the past four quarters, MDU earned $1.13 per share and paid out $.665 per share.  This payout verifies that MDU makes more money than it pays out and that leads me to think the company can continue to pay me and to increase the dividend as it has in the past.  

But will the company go out of business?  Will I lose my investment? There are few guarantees in life, but when a company has been around as long as MDU one would think they will continue in business and continue to pay us.  My simple measure of viability is the debt to equity ratio.  More companies go out of business because of poor debt management than most other reasons.  MDU’s D/E ratio is .59.  This is pretty good for an industrial company.

MDU may be a good fit for the income producing portion of your portfolio.

Very Truly Yours,


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