This is a guest contribution published on November 19th, 2016 by Small Cap Power.
Dividends are sought after for many who invest in the stock market. They are normally a sign from a company of strong and consistent revenue streams and profits further down the road.
Even if a company enters a downturn in its business cycle, management will do whatever they can to maintain the dividend payout to preserve the value of the company, and only raise them when the level of certainty surrounding any growth in earnings can be considered recurring.
If a company is increasing its dividend it is a strong sign to the market from management that it believes the growth in earnings that it has experienced will be sustained into the future.
The companies we’ll be taking a brief look at today have increased their dividends over the past four fiscal periods between 13% and 40% year over year, resulting in a rise in total dividend payouts of between 88% and 140% over that same time period.
Although some companies have paid dividends longer much longer (like the Dividend Aristocrats), we only went back a couple of years to ensure we are comparing the companies evenly.
Coresite Realty Corporation (COR)
- Dividend per Share- (FY-3): USD$0.81
- 3 Year Dividend Growth: 121%
- Dividend per share (FY0): USD$1.79
CoreSite Realty Corp (COR) is engaged in providing secure, reliable, high-performance data centers and interconnection solutions in eight key North American markets. Having grown its dividend since 2010, CoreSite does not appear to be slowing down and should continue to increase it as the years pass.
CoreSite has seen steady year-over-year revenue growth for the past decade, and has only seen a drop in quarter over quarter once between 2010 and 2015, back in Q4 of 2012 to Q1 of 2013.
Although CoreSite started issuing dividends in 2010, its net income didn’t turn positive until 2012, but has grown by 594% up to fiscal 2015. This has also translated into significant dividend growth over that time period. With continued growth, increasing revenue and net income by 17% and 60%, respectively, for Q3 2016 over the same period last year, CoreSite may be in for another dividend boost in Q4 of 2016 or Q1 of 2017, as this has been when CoreSite changed its dividend payout in the past (Figure 1 Below).
