With 10 Year Treasuries currently yielding 2.47%, investors could look to high yield stocks with a history of dividend increases for additional income (at a cost of additional risk). One excellent place to start is the US Dividend Champions list, which is compiled and tracked at DRIP Investing and also tracked on my site. Dividend Champions are companies that have increased their dividend payout for at least 25 consecutive years.
There are currently 12 dividend champions yielding more than two times the 10 year Treasury yield of 2.47%. Several of these stocks also appeared in my August article of Dividend Aristocrats yielding more than 10 year Treasuries. Each stock should be considered on its own merits. For example, Eli Lilly (NYSE:LLY) has not increased its dividend yet this year, so it is possible it will be removed from the Dividend Champion list in 2011. Removal from the list does not in-itself mean a stock is an unworthy investment; however, income investors should seek stocks with sustainable dividends and a history of increasing dividends.
One added criteria that could be considered is whether the stock is trading above its long term moving average so I have added the percent each stock is above or below the 200 day simple moving average. Also listed is the payout ratio and year to date performance for each stock. The payout ratio could be skewed depending on recent earnings reports, which, if very low as in the case of IRET, will create an inflated ratio. Inflated ratios could either be due to a temporary earnings "blip" or a sign of imminent trouble for the dividend so further due diligence is always warranted. Nevertheless, this list is a good starting point for those looking to add equity yield to his or her portfolio:
|Ticker||Company||Trend||Dividend Yield||Payout Ratio||Performance (Year)||200-Day SMA||Price|
|IRET||Investors Real Estate Trust||Here||7.77%||3085.36%||4.00%||5.20%||8.83|
|PBI||Pitney Bowes Inc.||Here||6.63%||82.68%||1.57%||-0.17%||22.02|
|MO||Altria Group Inc.||Here||6.10%||83.19%||33.48%||19.72%||24.92|
|LLY||Eli Lilly & Co.||Here||5.44%||50.65%||5.08%||4.08%||36.01|
|CINF||Cincinnati Financial Corp.||Here||5.29%||50.29%||20.17%||11.61%||30.26|
|WRE||Washington Real Estate Investment Trust||Here||5.17%||502.91%||27.10%||15.51%||33.49|
|TEG||Integrys Energy Group, Inc.||Here||5.09%||103.70%||33.07%||16.12%||53.48|
|ORI||Old Republic International Corp.||Here||4.96%||309.55%||44.44%||12.21%||13.91|
Disclosure: No positions