We saw a slowdown in the dividend upgrade space last week where only 4 dividend paying stocks received upgrades from investment firms. Each company's situation is unique, but once again, the upgrades are based mostly on stock valuation and growth. We have listed the reason for the upgrade and the investment firm's new price target when it was made available.
NiSource (NI)
NiSource was upgraded by KeyBanc Capital Markets on March 21st from a Hold to a Buy with a price target of $26.5. KeyBanc said they are expecting many positive catalysts for NiSource in 2012, including raising the dividend, new shale place and opportunity around modernizing the transmission pipe. NiSource provides natural gas, electricity and other energy services to its 3.8 million customers. NiSource has a dividend yield of 3.8% and a payout ratio of 59%. The company has not raised its dividend in the last 5 years and has been paying dividends since 1987.
Nucor (NUE)
Nucor was upgraded by UBS from Neutral to Buy on March 19th. UBS cited valuation and improving steel prices as the reason for the upgrade. Nucor manufactures steel, steel related products and other metals. Nucor has a dividend yield of 3.4% and a payout ratio of 59%. The company started paying dividends in 1973 and has increased the dividend for the last 3 years. It currently has a very low estimated 3 year dividend growth rate of 1.5%.
Steel Dynamics (STLD)
Steel Dynamics was also upgraded by UBS from Neutral to Buy on March 19th. UBS cited the same reasons as the Nucor Upgrade, valuation and improving steel prices. Steel Dynamics is a steel producer and metal recycler in the United States. STLD has a dividend yield of 2.7%, which is above its 5 year yield average of 2.4%. The company has a payout ratio of just 33% and has increased the dividend for 2 years.
Altria Group (MO)
Altria was upgraded by Wells Fargo from Market Perform to Outperform on March 23rd, with a price target between $31 and $33 per share. Wells Fargo said the upgrade was based on growing profitability at Altria and rated the stock its top Tobacco pick. Wells Fargo downgraded Tobacco competitor Reynolds American (RAI) on the same day to market perform. MO has a dividend yield of 5.3% and a payout ratio of 96%. 2012 will mark the 3rd year of consecutive dividend increases for the company which started paying dividends in 1928.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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