Jonas Elmerraji from Stockpickr highlighted seven companies that have increased their dividends in February. As we continue to look for companies with dividends, those increasing them is welcome, as inflation is likely to be a reality which we have to face.
The seven companies are:
- Cisco Systems (NASDAQ:CSCO) is the largest company to announce a dividend hike. While share prices have been somewhat volatile, dividend payouts have been consistent since the firm announced its first dividend in 2011.
- Occidental Petroleum (NYSE:OXY) shares have rallied more than 11% this year
- United Parcel Service (NYSE:UPS) hiked its dividend payout by 9.62%, bringing the firm's quarterly dividend to 57 cents per share, approximately a 3% dividend yield.
- 3M (NYSE:MMM) manufactures a slew of industrial and consumer products that range from Scotch Tape and Post-It Notes. Company management increased the dividend by 9.62% to 59 cents per share. That's 54 consecutive years of payout hikes.
- MasterCard (NYSE:MA) doubled its tiny dividend payout on Tuesday, bringing the firm's quarterly dividend to 30 cents per share.
- The world's largest copper and molybdenum producer, Freeport-McMoRan (NYSE:FCX) increased its dividend payout by 25%, bringing its quarterly dividend to 31 cents per share. That's a 2.2% yield at current share price levels.
- Apache (NYSE:APA) has paid out a dividend for the last 46 straight years, but its current yield is only 0.64%. A 13.33% dividend hike improves Apache's quarterly payout to 17 cents per share, but it's still not a material move. This is the least attractive of the bunch.
This is an interesting and diversified mix of companies. It's possible that the weighting is a little towards commodities with FCX, OXY and APA, but I don't think that is wholly bad in today's environment.
|Asset||Fund in this portfolio|
|REAL ESTATE||(NYSEARCA:ICF) iShares Cohen & Steers Realty Majors|
|FIXED INCOME||(NYSEARCA:TIP) iShares Barclays TIPS Bond|
|Emerging Market||(NYSEARCA:VWO) Vanguard Emerging Markets Stock ETF|
|US EQUITY||(NYSEARCA:DVY) iShares Dow Jones Select Dividend Index|
|US EQUITY||(NYSEARCA:VIG) Vanguard Dividend Appreciation ETF|
|INTERNATIONAL EQUITY||(NYSEARCA:IDV) iShares Dow Jones Intl Select Div Idx|
|High Yield Bond||(NYSEARCA:HYG) iShares iBoxx $ High Yield Corporate Bd|
|INTERNATIONAL BONDS||(NYSEARCA:EMB) iShares JPMorgan USD Emerg Markets Bond|
- 7 Dividend Stocks Increasing Payouts in February 2012 -- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
|1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|Retirement Income ETFs Tactical Asset Allocation Moderate||1%||2%||22%||10%||77%||7%||54%|
|7 Dividend Stocks Increasing Payouts in February 2012||10%||15%||45%||33%||108%||18%||49%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||3%||2%||14%||16%||103%||2%||7%|
This shows strong performance from this selection. There is a mixture of long term solid performers along with some that have had more of a bumpy ride. This is reflected in the Sharpe ratios being closer to the benchmark portfolio than the actual returns. This says to me that this is more for the longer term investor who can wait through some of the bumps.
Three Month Chart One Year Chart Three Year Chart Five Year Chart
The five year chart shows the volatility that leads to the lower Sharpe ratio mentioned above. It may be that having a section of your portfolio allotted to these stocks will give you some upside, but it is buttressed by solid long term dividend aristocrats such as MCD, PG, JNJ.
In any case, the performance here is interesting, and don't forget that these are companies that are boosting their dividends which is great for short term income.
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.