Jonas Elmerraji of theStreet.com continues to watch dividend stocks and he has highlighted six that have recently increased their payouts. We continue to look at equities that could potentially strengthen your portfolio. I think that every time we see a company raising its dividend, it's worth considering whether they are worth buying or putting on a watch list.
- HP (HPQ) has raised its dividend 10% to 2.1%. HP has been under the kosh of late and it is seeing some good news on the back of restructuring. If nothing else, this is worth watching to see if the new management can make the changes necessary for HP to recover some of its lost ground
- Dow Chemical (DOW) is having a strong year with a 13.6% rise in its stock price. Dow recently announced a 28% dividend increase that brings the dividend yield to 3.9%. With a strong, diversified business and good yield, this is an attractive stock
- PNC Financial Services (PNC) has $264 billion in assets and more than 2,500 branches spread throughout the Midwestern, Mid-Atlantic, and Southeastern U.S. PNC's conservative approach paid off when it was able to scoop up some distressed banks in the recent meltdown. PNC recently announced a 14.29% dividend increase, which brings PNC's dividend yield to 2.52%.
- Idex (IEX) is involved in a wide number of markets: fluid pumps, metering devices, health and science products as well as fire and safety offerings. Idex is heavily dependent on pumps and meters and cyclical swings increase volatility. Idex recently announced a 17.65% dividend increase that brings its yield to just shy of 2%.
- Tanger Factory Outlet Centers (SKT) owns 37 outlet centers in 25 states, comprising more than 11.4 million square feet of leasable space. All told, more than 175 million shoppers visit Tanger properties each year. Recently Tanger announced a 5% increase to a 2.84% dividend yield at current price levels.
- International Speedway (ISCA) operates major racetracks around the country including Daytona International Speedway and Talladega in Alabama. ISCA announced an 11.1% dividend increase, which results in a yield of less than 1%, which is pretty low.
This is an interesting mix of equities. The household names such as HP and Dow. A solid bank and a collection of lesser known stocks. It will be interesting to see how they compare with our dividend bearing ETF benchmark portfolio.
| Asset | Fund in this portfolio |
|---|---|
| REAL ESTATE | (ICF) iShares Cohen & Steers Realty Majors |
| CASH | CASH |
| FIXED INCOME | (TIP) iShares Barclays TIPS Bond |
| Emerging Market | (VWO) Vanguard Emerging Markets Stock ETF |
| US EQUITY | (DVY) iShares Dow Jones Select Dividend Index |
| US EQUITY | (VIG) Vanguard Dividend Appreciation ETF |
| INTERNATIONAL EQUITY | (IDV) iShares Dow Jones Intl Select Div Idx |
| High Yield Bond | (HYG) iShares iBoxx $ High Yield Corporate Bd |
| INTERNATIONAL BONDS | (EMB) iShares JPMorgan USD Emerg Markets Bond |
- 6 Companies Increasing Dividends in April 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
| Portfolio/Fund Name | YTD Return | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|---|
| Retirement Income ETFs Tactical Asset Allocation Moderate | -1% | -2% | -19% | 9% | 70% | 7% | 51% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | 4% | -1% | -5% | 14% | 99% | 2% | 7% |
| 6 Companies Increasing Dividends in April 2012 | 9% | -5% | -18% | 8% | 29% | -2% | -9% |
HP is recovering from a torrid time and so is likely to be below par. Dow is likely to be a solid citizen without blowing the doors off anything in particular. PNC is likely to be another solid citizen -- probably having taken a bath during the crisis but emerging well. The others are going to be more volatile players and you might win and you might lose.
To my mind, I would want to group these in different buckets and apply different criteria. For example, HP is not going to go away and perhaps the new management team will bring back better days so there is certainly upside growth. International Speedway could do very well if motor sport continues to gain popularity but it might not -- this is a much more risky proposition and could give you big upside or downside swings.
Three-Month Chart
One-Year Chart
Three-Year Chart
Five-Year Chart
I can believe that HP and PNC have weathered their storms and have upside but the selection of stocks don't make it easy to come to any conclusion and so I would pass this group and look for something else.
More details...
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: 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.
