Six Double Digit Dividend Stocks Increasing Their Yields

After Wednesday’s article High-Yield, High-Risk Dividend Stocks, I had hoped to feature a few high-yield stocks raising their dividends this week. Patiently I watched the news wire for some announcements that fit the bill, and it didn’t take long. As if they were waiting for the cue, three high-yield stocks recently announced increased cash dividends for their shareholders:

Chimera Investment (CIM) is a specialty finance company that invests in residential mortgage-backed securities (RMBS), residential mortgage loans, real estate-related securities and various other asset classes. Monday, CIM increased it quarterly dividend 50% to $0.12/share. The dividend is payable October 30, 2009 to common shareholders of record on October 1, 2009. The ex-dividend date is September 29, 2009. The current yield based on the new dividend is 11.82%.

Hatteras Financial (HTS) is an externally managed mortgage real estate investment trust (REIT) formed to invest in adjustable-rate and hybrid adjustable-rate single-family residential mortgage pass-through securities. Tuesday, the company raised its quarterly dividend 4.5% to $1.15/share. The dividend is payable on October 23, 2009, to stockholders of record on October 2, 2009, with an ex-dividend date of September 30, 2009. The current yield based on the new dividend is 13.94%.

Triangle Capital (TCAP) is a specialty finance company that provides customized financing solutions to lower middle market companies. Wednesday, the company bumped its quarterly dividend 2.5% to $0.41/share. The dividend is payable on October 22 to shareholders of record on October 8. The current yield based on the new dividend is 14.07%.

Though their yields are not double-digit, three additional companies provided double-digit dividend growth in their cash dividends:

The First of Long Island Corp. (FLIC) provides financial services through its wholly-owned subsidiary, The First National Bank of Long Island. Tuesday, the company increased its dividend 11% to $0.20/share. The dividend will be paid on October 9, 2009 to shareholders of record on October 2, 2009. To receive the dividend, you have to own the shares before September 30th. The current yield based on the new dividend is 2.98%.

Lockheed Martin (LMT) is the world’s largest military weapons manufacturer and is also a significant supplier to NASA and other government agencies. Thursday, the company raised its quarterly dividend 10.5% to $0.63/share. The dividend is payable Dec. 31, 2009 to holders of record as of the close of business on Dec. 1, 2009. The current yield based on the new dividend is 3.26%.

McDonald’s (MCD) is the leading global foodservice retailer with more than 32,000 local restaurants in more than 100 countries. Thursday, the company raised its quarterly dividend 10% to $0.55/share. The dividend is payable on December 15, 2009 to shareholders of record at the close of business on December 1, 2009.

MCD’s Chief Executive Officer Jim Skinner said,

So far in 2009 we’ve returned nearly $4.0 billion to shareholders through dividends and share repurchases, bringing total cash returned since the beginning of 2007 to about $15.5 billion. With today’s dividend increase, we expect to end the year near the high end of our three-year, $15 billion to $17 billion total cash return target.

The stock is a Dividend Aristocrat and has increased its dividend 33 consecutive years. The current yield based on the new dividend is 3.92%. [Analysis]

For long-term dividend investors, a high-yield is not the most important factor to look for, instead that honor belongs to consistently growing dividends. For stocks with a long string of consecutive dividend increases, see this list.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

(Photo Credit)

Comments

[Dividend Growth Investor]

I completely agree with you that successful dividend investing is not about picking the highest yielding stocks, but the ones that would provide you with a rising stream of dividend income.
Another issue is that some of these companies do not have a long history of raising and paying out dividends..

MCD on the other hand is a true dividend aristocrat, having raised dividends for several decades now..The dividend is up 46.7% for the past 2 years.

2009 Sep 25 09:12 AM

[Senan]

The top 2 are property related outfits. How in the current climate are they increasing dividends? If they do have extra cash, would it not be better employed reducing debt. Maybe they have no debt I don't know...I;ll have to dig deeper...

2009 Sep 25 09:38 AM

[User 491615]

I could be wrong but your list of holding shows McDonald's yet your holdings disclaimer says that you have no position in McDonald's. Maybe I don't understand.

Mike,
A dividend investor

2009 Sep 25 10:20 AM

[Dividends4Life]

Mike: You are correct, I am long in MCD. I had originally wrote the article with 5 companies before MCD's announced last night. After MCD's announcement of its dividend increase, I quickly updated the article, but failed to update the disclosure.

Best Wishes,
D4L

2009 Sep 25 01:01 PM

[Russ Krull]

Hatteras invests in gov't backed mortgage securities, so there's about as close to zero default risk as you can get. They leverage the portfolio, borrowing short term and buying adjustable securities. The rate adjustments on the assets are typically longer term than the borrowing, so an upturn in short rates would be a problem for them.
As long as the fed keeps short rates near zero, HTS business model will generate healthy cash flows.

No position in HTS. It's just one of those stocks I wish I'd bought when I first learned about it and it was a lot cheaper.


On Sep 25 09:38 AM Senan wrote:

> The top 2 are property related outfits. How in the current climate
> are they increasing dividends? If they do have extra cash, would
> it not be better employed reducing debt. Maybe they have no debt
> I don't know...I;ll have to dig deeper...

2009 Sep 25 11:33 PM

[Temperance]

After crunching the numbers, I think that HTS is my favorite. Though a very young REIT, they have had impressive success. I am looking to buy in at $25-30 if it ever hits that point again. I am, admittedly, a greenhorn investor and not a gambler but, in this market environment I am trying to think as a contrarian while, at the same time, I am struggling to find something real that I can put my money into. I wonder if I am just being naive? Any thoughts?

2009 Sep 26 12:13 PM

[PANAMA JACK]

Temperance, I personally think you may be on to something.
Are we all being led into the slaughter house?
.


On Sep 26 12:13 PM Temperance wrote:

> After crunching the numbers, I think that HTS is my favorite. Though
> a very young REIT, they have had impressive success. I am looking
> to buy in at $25-30 if it ever hits that point again. I am, admittedly,
> a greenhorn investor and not a gambler but, in this market environment
> I am trying to think as a contrarian while, at the same time, I am
> struggling to find something real that I can put my money into. I
> wonder if I am just being naive? Any thoughts?

2009 Sep 26 07:46 PM

[Deacon Blues 0506]

Hi.............

Enjoy your column regularly - thank you for all of the useful information you provide!

I recently invested in Chimera (CIM) and was interested in your opinion (since it's mentioned above).

Many thanks.........

2009 Sep 26 09:36 PM

[Investor_guide]

You are not the only one feeling that way. There is really not a solid investment out there right now and October will be bearish, just like last year. The market repeats itself more often than you think.

Buying puts or shorting stocks would be a good idea now. But you've got to know what to choose.
FAS and other financials are set for a long awaited drop. FAZ is looking attractive right about now, it is Financial Bearish x3. Buying 6 month CALL options or just stock should bring you some gains in Ocotber.

Here is a helpful tool. Hope it helps.
6bbf50zcnqtl4n0b9orb5w...

Good luck to all ;)

On Sep 26 12:13 PM Temperance wrote:

> After crunching the numbers, I think that HTS is my favorite. Though
> a very young REIT, they have had impressive success. I am looking
> to buy in at $25-30 if it ever hits that point again. I am, admittedly,
> a greenhorn investor and not a gambler but, in this market environment
> I am trying to think as a contrarian while, at the same time, I am
> struggling to find something real that I can put my money into. I
> wonder if I am just being naive? Any thoughts?

2009 Sep 27 01:52 AM

[Chancer]

You may want to wait for lower prices for mortgage REITs. Many so-called experts think we may see more real estate mortgage default problems in commercial mortgages, etc., which may cause all real estate finance stocks to decline.


On Sep 26 12:13 PM Temperance wrote:

> After crunching the numbers, I think that HTS is my favorite. Though
> a very young REIT, they have had impressive success. I am looking
> to buy in at $25-30 if it ever hits that point again. I am, admittedly,
> a greenhorn investor and not a gambler but, in this market environment
> I am trying to think as a contrarian while, at the same time, I am
> struggling to find something real that I can put my money into. I
> wonder if I am just being naive? Any thoughts?

2009 Sep 27 03:49 PM

[Living4Dividends]

Russ - you hit the nail on the head when you said "As long as the fed keeps short rates near zero, HTS business model
will generate healthy cash flows." When the Fed raises interest rates, these guys profits will be hurt. If their is a spike in inflation, and Fed has to jack up short term rates above long term rates, in order to prevent inflation (ala Volcker) then HTS will be ruined. Fortunately the Fed doesnt make sudden moves, and it will take many quarters of jacking up short term rates until the point of pain (and of losses is reached). Hopefully HTS can get out of the way of this slow moving freight train, when and if it starts a rolling.

Still, I am not investing in HTS - too risky.


On Sep 25 11:33 PM Russ Krull wrote:

> Hatteras invests in gov't backed mortgage securities, so there's
> about as close to zero default risk as you can get. They leverage
> the portfolio, borrowing short term and buying adjustable securities.
> The rate adjustments on the assets are typically longer term than
> the borrowing, so an upturn in short rates would be a problem for
> them.
> As long as the fed keeps short rates near zero, HTS business model
> will generate healthy cash flows.
>
> No position in HTS. It's just one of those stocks I wish I'd bought
> when I first learned about it and it was a lot cheaper.

2009 Sep 28 03:38 PM

[ge12ar]

NLY should have been included. Their business model is very similar to HTS. They also raised their dividend a few months ago. I haven't checked recently but it is in the 12% range.

2009 Sep 29 09:53 AM

[mbkelly75]

I have been a long-term investor in NLY and their management is darn near the smartest in the world when it comes to mortgages. They correctly saw the crash before it happened and darn near side-stepped the whole problem with changes in their investments. They are now benefiting from the Freddy-Mac and Fanny-May problems by picking up a lot of stuff well below the value they think it has. They just raised their dividend again and it is a healthy 15.44% even now at the market close on Friday (2 Oct) when they are over 107% off of their 52 week low.

2009 Oct 03 01:19 PM