11 Stocks Increasing Dividends, Long-Term Return

It is a well-documented fact that a significant portion of the historical equity returns are a result of reinvested dividends. In Triumph of the Optimists: 101 Years of Global Investment Returns (2002), the authors looked at equity returns from capital gains and dividends from 1900 to 2000. They determined that performance in any given year was driven by capital appreciation, but long-term returns were largely the result of reinvested dividends.

Here are several companies looking to increase their long-term returns by raising their cash dividends:

Intel (INTC) is the world’s largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products. November 16th, the company raised its quarterly dividend 12.5% to $0.1575/share. Paul Otellini, Intel president and CEO commented “With one of the highest dividend yields in the technology industry, the dividend increase is another sign of our confidence in business prospects going forward.” The yield based on the new payout is 3.26%.

Lancaster Colony (LANC) manufactures and markets consumer products in two segments: Specialty Foods, and Glassware and Candles. November 16th the company increased its dividend 5.3% to $0.30/share. The payable is payable December 31, 2009 to shareholders of record on December 10, 2009. The ex-dividend date is December 8. LANC is a Dividend Achiever and has increased its dividend for 47 consecutive years. The yield based on the new payout is 2.41%.

Brown-Forman (BF.A) on November 16 raised its dividend 4.3% to $0.30/share. Stockholders of record on December 7, 2009 will receive the cash dividend on January 4, 2010. This is Brown-Forman’s 64th consecutive year of quarterly dividends and the 26th consecutive year it has increased the annual dividend. The yield based on the new payout is 2.23%.

Sysco (SYY) is the largest U.S. marketer and distributor of foodservice products. November 17th the company boosted its dividend to $0.25/share. The dividend is payable on January 22, 2010, to common shareholders of record at the close of business on December 31, 2009. The ex-dividend date is December 29, 2009. LANC is a Dividend Achiever and has increased its dividend for 39 consecutive years. The yield based on the new payout is 3.66%.

Royal Gold (RGLD) is the largest U.S.-based company engaged in the acquisition and management of precious metal royalty interests. November 18th the company increased its quarterly dividend 13% to $0.09/share. The dividend is payable January 15, 2010, to shareholders of record at the close of business on January 4, 2010. The ex-dividend date is December 31, 2009. The yield based on the new payout is 0.68%.

PennantPark (PNNT) specializes in direct and mezzanine investments in middle-market companies. November 18th the company raised its quarterly dividend 4.2% to $0.25/share.The dividend is payable on January 4, 2010 to stockholders of record as of December 24, 2009. The ex-dividend date is December 22. The yield based on the new payout is 11.96%.

Harsco (HSC) is a industrial service provider and manufacturer has operations in steel mill services and access services, as well as construction. November 19th the company boosted it quarterly dividend for the 16th consecutive year to $0.205/share. The dividend is payable February 16, 2010 to Harsco stockholders of record as of January 15, 2010. The ex-dividend date is January 13. The dividend yield on the new payout is 2.5%. LANC is a Dividend Achiever and has increased its dividend for 19 consecutive years. The yield based on the new payout is 2.52%.

NSTAR (NST) was created through the 1999 merger of BEC Energy and Commonwealth Energy System. November 19th the company increased its quarterly dividend 6.7% to $0.40/share.The payable February 1, 2010 to shareholders of record as of January 8, 2010. The ex-dividend date is January 6. The yield based on the new payout is 4.98%.

Laclede Group (LG) distributes natural gas on a retail basis in St. Louis and nearby suburban areas. November 19th the company raised its quarterly dividend to $0.395/share. The dividend will be payable on January 4, 2010, to shareholders of record on December 11, 2009. The ex-dividend date is December 9, 2009. Yield on the dividend is 5%. The yield based on the new payout is 5.00%.

Bob Evans Farms (BOBE) owned and operated 571 Bob Evans Restaurants & 132 Mimi’s Cafes. November 19th the company announced a 12.5% increase in the quarterly cash dividend to $0.18/share. The dividend is payable on Dec. 15 to stockholders of record at the close of business on Dec. 4. The yield based on the new payout is 2.83%.

Nike (NKE) is the world’s leading designer and marketer of high-quality athletic footwear, athletic apparel, and accessories. November 19th, the company increased its quarterly dividend 8% to $0.27/share. The dividend is payable on January 4, 2010 to shareholders of record at the close of business on December 7, 2009. The yield based on the new payout is 1.70%.

When looking for stocks with growing dividends, longevity of consecutive increases is important. For a list of stocks with a long string of consecutive dividend increases, see this list.

Disclosure: Long INTC, SYY. See a list of all my income holdings here.

(Photo Credit)

Comments

[Joseph L. Shaefer]

Thank you for your always-interesting articles, D4L. My watch list is filled with companies like these so I always appreciate seeing new ones to add to the mix.

Though I am solidly in the camp of those who believe in dividend investing, I part company with those who buy companies like WMT, ABT and MCD exclusively, believing an incremental increase from 2% to 2.2% will serve their portfolios well. That level of yield and "safety" that comes only from size may be illusory -- many former "dividend aristocrats" lost their lands and castles and are now begging in the streets for food. (GE, BAC and C were once considered aristocrats and are now paupers...) That's why I think it's essential to look at the up-and-comers, the niche players, and those increasing market share like the ones you have identified here.

While well-managed, growing companies that yield 2-3% and are growing their dividends 10% a year, year after year are good -- those of us older than 20 or 30 need to see some income TODAY as well.

That's why I research, own, and write about food and energy companies whose product will be consumed as long as their are people on earth and who <> have an equally fine record of increasing dividends -- but do so from a much higher base.

(For example, many natural gas pipeline MLPs yield more than 8%, are conservatively managed, and have raised their dividends every year since they are paid on the amount of gas going through their pipeline -- the owner of the gas takes all the risk in the price of the product.)

For me, dividends are an important part of our total return and dividend growth is an essential element in increasing portfolio value. But dividend growth from a higher sustainable baseline is even better!

2009 Nov 20 09:57 AM

[Shishir Nigam]

Agree with you completely Joseph.

D4L, all the companies that you mention might well be strong and solid companies. But I wouldn't be happy with a yield of 0.68% (taking the extreme example) for Royal Gold even if they increase their payout by 20% each year. In that hypothetical scenario, it would take 11 years just to get up to a yield of 5% (not considering any price appreciation), which is what I'd consider a good yield.

So from a purely dividend perspective, I wouldn't be keen on looking at anything with a sub-4% yield, unless there are some strong capital appreciation prospects that can make up for a low payout.

For more analysis, check out my blog: youngandinvested.com

2009 Nov 20 11:56 AM

[mbkelly75]

Nice work, once again. INTC has been a favorite stock of mine for my trading portfolio for years - even before they started paying a dividend in 1992. This new raise in their dividend has not only given them a dividend >3% - it has also given them the 5 year record of raising dividends that is my requirement for being a Core Portfolio stock. I have a lot of the stock with zero cost-basis from trading in the past and the recent trades with it only have a cost-basis of $16.00 now.
A good list for more DD - I like stocks to be =>3% so some of them would not be a buy now, but a price drop might put them there so they are worth watching. Thanks again and keep up the good work.

@Shisshir - All of us have our own way of judging what stocks to buy now and what stocks to keep an eye on, but you might be missing some good stocks by looking only at high yields. The Golden Ratio of Stock Dividends is 3.1% - 3.8%. Over the long-term that yield gives some impressive results.

@Joesph - Your examples (WMT, ABT, MCD) all have MUCH better increases historically than 2.2%. WMT has a 5 year average dividend growth rate of 16.8% (2% is still too low but they are worth watching), ABT has a growth rate of 8.1% (3.02% dividend), and MCD (another long-term holding of mine in the Core Portfolio) has an average growth rate of 32.02% (!!!!!) over the last 5 years and a dividend of 3.42% right now with a 5 year Total Return of 137.9% without the effect of re-investing those dividends. That is not chicken feed!!!!
ABT and MCD will grow very well and give a 10% annual dividend yield on cost relatively quickly as a long-term holding.

2009 Nov 20 03:46 PM

[Walt17]

Good article. I already own SYY. Although with my criteria, I don't consider anything <2%, some of the others seem like they are worth a look.

FYI, some of the data under SYY refers to LANC.

2009 Nov 21 08:57 AM

[YoYoMama]

Thank you for profiling PNNT, which pays a handsome and increasing dividend. I hold it, I love it.

2009 Nov 21 09:38 AM

[drbob66]

Good article. One can nitpick about minimum div yield, etc. (as mbkelly75 points out in his earlier comment)...but these articles by D4L are some of the most useful on this site. Thanks, and keep up the good work.

2009 Nov 22 05:00 PM