With a couple of exceptions, the earnings season is going as planned for The Dividend Hunter recommendations portfolio. I’m releasing the mid-month update a few days early because of there have been several positive events affecting some of our core holdings that I think you should be aware of. Here are a few notes to keep you up to speed on what I am picking up.
Dividend Increases:
Macquarie Infrastructure Co. (NYSE: MIC) increased its quarterly dividend by 1.3% to $0.95 per share. This was the third consecutive quarter over quarter increase and fourth out of the last five quarters.
Following the second full quarter since the MLP’s IPO, Arc Logistics Partners LP (NYSE: ARCX) increased its distribution by 3.2% over the first quarter payout to $0.40 per unit.
Both recommendations are part of my strategy of trying to add stocks with a management team committed to raising dividends.
Other Items of Interest:
Oaktree Capital Group LLC (NYSE: OAK) declared a second quarter distribution of $0.55 per unit, compared to $0.98 paid for the first quarter and the company’s lowest payout since the third quarter of 2012. OAK is the only variable dividend payer in the portfolio, so I wanted to make sure that the trend was not turning negative. Each quarter, Oaktree generates distributable cash flow that comes from a combination of management fees and incentive income. The management fees provide steady cash flow and grow as Oaktree increases its assets under management. By company policy, incentive income is only recognized and included in distributable income when the funds the company manages start to pay distributions to investors. As a result, the incentive fee portion of income can be quite lumpy from quarter to quarter. The company only pays itself, and thus investors, incentives when there is no chance the fees could be clawed back due to poor investment returns. During the earnings conference call it was noted that accrued but not yet realized incentive fee was up to $8.46 per unit. This money will eventually be paid to investors as attractive distributions. Watch for more from Oaktree.
New Residential Investment Corp (NYSE: NRZ) gave positive news to the market by stating that the portfolio can currently generate at least $0.20 per share of quarterly cash flow, handily covering the current $0.175 dividend. The share price jumped by almost 4% and a planned reverse split later this year will increase the stocks visibility which should help push the share price higher. In the meantime, collecting an 11% reliable dividend does not hurt.
Arc Logistics Partners LP (NYSE: ARCX) dropped by $1.02 or 4% on Monday, August 11. The decline was the result of a large trade in the MLP, with 50,000 units trading hands, compared to the average daily volume of 12,000. The drop has pushed the yield up to 6.75%, making ARCX units even more attractive, especially if you haven’t yet picked up shares since ARCX was highlighted in the August issue of The Dividend Hunter. This event highlights one point about Arc Logistics. This is a very thinly traded MLP. One day last week just 31 units in total were traded. When you go to buy units look closely at the bid/ask spread and use a limit order to improve your price below the ask quote.