9 Stocks Giving Dividend Raises in Q209

In 1985 I graduated from college and took my first job as a staff accountant with a $21,000 annual salary. Now I am over the same department that I was hired into and entry level staff accountants start with a base salary of $56,500 per year. That equates to a 4.2% annual increase. Just as employees expect an annual raise, so do dividend investors.

Understanding the importance of increasing dividends, these big-name companies raised their dividends in the second quarter:

• Cardinal Health (CAH) – Yield: 2.28% – Analysis
• Clorox (CLX) – Yield: 3.53% – Analysis
• Del Monte Foods (DLM) – Yield: 2.08%
• IBM (IBM) – Yield: 2.10%
• Johnson & Johnson (JNJ) – Yield: 3.43% – Analysis
• PepsiCo (PEP) – Yield: 3.18% – Analysis
• Target (TGT) – Yield: 1.76%

Just this last week these two companies rewarded their shareholders with increased cash dividends:

General Mills (GIS) is a major producer of packaged consumer food products, including Big G cereals and Betty Crocker desserts/baking mixes. On June 29th, the company announced a 9% increase to its dividend to $0.47/share. The dividend is payable August 3, 2009, to shareholders of record July 10, 2009. At the new rate, the stock is yielding 3.23%.

MFA Financial (MFA) is a real estate investment trust that invests in secured pools of mortgages on single family residences. This week MFA increased it quarterly dividend by 13.6% to $0.25/share. The ex-dividend date is July 9, 2009 and the dividend will be paid on July 31, 2009 to stockholders of record on July 13, 2009. At the new rate, the stock is yielding 14.29%.

The first step to identify excellent income stocks is to look for those that increase their dividend each year. For stocks with a long string of consecutive dividend increases, see this list.

Full Disclosure: Long CLX, JNJ, PEP. See a list of all my income holdings here.

Comments

[BlueOkie:]

Dividend yield is not the big metric in my opinion. What percentage of eps is it? A drop in stock price causes dividend yield to go up.

Jul 05 09:42 AM

[Nick Rao:]

There are a lot of companies that pay dividends whose price might be low but have stock prices down due to the general market conditions. Depends on the company fundamentals and position in industry whether to invest in them or not. I do like the point made by the author. Companies paying dividends deserve a good look by investors.


On Jul 05 09:42 AM BlueOkie wrote:

> Dividend yield is not the big metric in my opinion. What percentage
> of eps is it? A drop in stock price causes dividend yield to go
> up.

Jul 05 10:24 AM

[Old Trader:]

In regards to MFA, I'd be leery of anything that has anything to do with mortgage-backed paper, given current economic conditions (both residential, as well as commercial).

Jul 05 11:20 AM

[Ilanbigfoot:]

Nice article. Just FYI: according to InflationData.com, the inflation rate from May 1985 to May 2009 (assuming you graduated and was hired in May....?) was 99.31%, or 2.92% annualized. So your purchasing-power raise was really only about 1.3% annually. Still, not bad!

Jul 05 11:30 AM

[wobatus:]

Not "his" purchasing power raise, but that of the generic new hire in his former position. Good for young entry level staff accountants.


On Jul 05 11:30 AM Ilanbigfoot wrote:

> Nice article. Just FYI: according to InflationData.com, the inflation
> rate from May 1985 to May 2009 (assuming you graduated and was hired
> in May....?) was 99.31%, or 2.92% annualized. So your purchasing-power
> raise was really only about 1.3% annually. Still, not bad!

Jul 06 07:35 AM

[Dividend Gr...:]

I second OldTrader on MFA. The dividend yield is fat at 14.70%, but the payment has fluctuated greatly between 0.32 in 2002 to 0.05 in 2005/2006.


On Jul 05 11:20 AM Old Trader wrote:

> In regards to MFA, I'd be leery of anything that has anything to
> do with mortgage-backed paper, given current economic conditions
> (both residential, as well as commercial).

Jul 06 11:18 AM

[AssetReset:]

Don't forget the oil majors
Most yield 3 -7% right now and a great inflation hedge to boot

Jul 06 03:27 PM

[vvvvviking:]

MFA? Try again.

The issue is not credit risk, as Old Trader implies, since these guys buy only agency MBS from what I can tell. But don't count on that yield staying in the double digits, remember these guys are a REIT.

Jul 06 05:17 PM