3 Dividend Increases, More Expected in July

Dividends are getting a bad reputation from everywhere. First it was the dividend guts at big banks like Citigroup (C), Bank of America (BAC), and Lehman Brothers, which once were reliable dividend growth stocks that triggered a wave of cuts and suspensions across the board. The Standard & Poors recently announced that a record low companies increased dividends in 2Q. According to their report, the number of dividend cuts has increased to the highest since 1957. While it is easy to feel pessimistic after those not so positive headlines, one has to remember that there still are many companies, which keep raising their distributions. Companies, that raise distributions when others are slashing or eliminating theirs, citing “unfavorable conditions”, are the true champions where investors should look into concentrating their efforts. Several companies raised their distributions over the past week:

General Mills (GIS), which manufactures and markets branded and packaged consumer foods worldwide, approved a 9% increase to its quarterly dividend to 47 cents per share. General Mills is a former dividend aristocrat, which has fought back to regain its status in the elite dividend index since 2004. The stock currently yields 3.20%.

Senior Housing Properties Trust (SNH), which owns independent and assisted living communities, nursing homes, rehabilitation hospitals, wellness centers and medical office buildings throughout the United States, increased its quarterly distributions by 1 cent to 36 cents per share. Senior Housing Properties has increased its annual dividend in each of the past eight years. The stock currently yields 8.80%.

MFA Financial, Inc. (MFA) announced that its board has approved a 13.6% increase in its quarterly dividend from $0.22 to $0.25 per share. The company primarily invests in mortgage-backed securities (MBS) that include hybrid and adjustable-rate MBS (ARM-MBS). The dividend is pretty volatile, ranging from a low of 5 cents a share in 2005 and 2006 to a high of 32 cents in 2002. The current yield is 14.70%.

Despite the slow week for dividend increases, I am looking forward to a relatively busy July, since historically some well-known dividend aristocrats like Walgreen (WAG) and Stanley Works (SWK) tend to raise their dividends during the current month.

Walgreen (WAG) has raised its dividend every July over the past five years. This dividend growth stock has been raising dividends for 34 consecutive years and has a 5-year dividend growth rate of 21.30%.

Stanley Works (SWK) has raised its dividend every July over the past five years. This dividend growth stock has been raising dividends for 41 consecutive years and has a 5-year dividend growth rate of 4.20%.

Disclosure: None

Comments

[Pax Americana:]

Lovely information Thank you.....

Jul 06 12:36 PM

[David Van K...:]

Good article. It's that time of year again where S&P's broad statistics must be examined to see whether they are helpful in making individual stock-picking decisions. It happens four times a year, every January, April, July, and October, right after fiscal quarters end.

My findings in the past, and I expect they will be similar this time, are that the broad dividend statistics are not very helpful in selecting individual stocks for a dividend investment strategy. That's because a well-conceived dividend strategy can filter out stocks that are going to cut their dividends a very high percentage of the time. The indicia are there in the companies' business model and financial results for anyone who cares to examine them.

As a result, any investor who is attempting a dividend strategy, and who allows their stock selection to be steered around by S&P's broad statistics, will often be misled. We can expect to see a spate of articles in the coming week or two with dire headlines and superficial analyses of the dividend situation, all based on the broad S&P statistics and press releases. It is good to counter-balance these with articles such as the one above that get more granular.

The fact of the matter is, well-constructed dividend portfolios will mostly go on producing as before. Most of their stocks will not cut their dividends, they will increase them. To the owners of such portfolios, the S&P numbers, while factual and interesting, are little more than background noise.

Jul 07 08:58 AM

[BlueOkie:]

Dividends are again in vogue

Jul 07 02:49 PM

[13958:]

Dividends................ be in vogue ALL the time!

Jul 07 07:46 PM

[13958:]

Dividends.....SHOULD be in vogue with everyone!

Jul 07 07:47 PM

[YoYoMama:]

Thanks for pointing out stocks that pay better than 3% on a dividend.

Jul 10 09:56 AM