With rates remaining at record lows and the Federal Reserve Board's policy to keep them low for years to come, many investors are searching for yield. Last week a number of companies increased their quarterly dividends, again making their shares a bit more attractive compared to Treasuries.
Nordstrom (JWN) announced a 17% increase in its quarterly dividend to $0.27 per share, raising its annual dividend yield to 2.1%. Its forward annual dividend of $1.08 is up 69% from that of 2008 and represents a 34% payout ratio compared to its net income. On top of that, the retailer also announced a $800 million share repurchase program, further increasing the yields to shareholders.
Scripps Networks Interactive (SNI) announced a 20% increase it its quarterly dividend to $0.12 per share, boosting its annual dividend yield to 1.1%. The annual dividend of $0.48 compares is up 220% from 2008's dividend of $0.15. Investors could expect further dividend increases in years to come as the dividend is a mere 17% payout of net income for this lifestyle and interactive services company.
Fred's (FRED) raised its quarterly dividend by $0.01 to $0.06 per quarter. Fred now pays an annual 1.6% yield which is triple the amount it paid in 2008. The discount general store operator now distributes 32% of its annual income to shareholders.
Albemarle (ALB) increased its quarterly dividend to $0.20, an increase of 14% to a yield of 1.2%. The annual dividend of $0.80 is 67% higher than the annual dividend of 2008, which was $0.48 per share. Despite the increase in dividends, the payout ratio is a mere 17% for the chemical specialty maker.
Sherwin-Williams (SHW) increased its quarterly dividend by 7% to $0.39 per quarter, a yield of 1.6%. Dividend is a mere 11% higher than 2008 for the paint manufacturer. Investors should not expect an aggressive increase in future dividends unless Sherwin can improve its profitability, as it already pays out 38% of its annual net income.
Sigma-Aldrich (SIAL) increased its quarterly dividend by 11% to $0.20 for an annual yield of 1.1%. The dividend is up 54% compared to 2008's $0.52 annual dividend. Investors could expect a steady increase in dividends in the coming years, as the payout ratio is just 22%.
Although these particular companies don't pay the highest dividend yields in the investment universe (even after announcing hikes in the recent week), they do look attractive with 10-year Treasuries yielding 2.0% at the moment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.