U.S. corporations and some of their foreign rivals have been boosting dividends in prodigious fashion this year. During the last week of April alone, there were 66 companies, which raised their payouts. That doesn't include the slew of bank dividend increases seen earlier this year, Procter & Gamble's (PG) dividend hike earlier in April, or dividend increases from Intel (INTC) and Costco (COST), just to name a pair, in May.
Given the volatile market environment investors are currently having to contend with, it pays to remember that over time, dividends account for a substantial part of a portfolio's returns and their the ideal with which to cope with topsy-turvy markets. Put it this way, if dividends are something that Warren Buffett swears by; then dividends should be good enough for the rest of us. Consider some these dividend payers for the rest of 2012 and beyond.
The Dow component yields 3%, which is better than the S&P 500 and the Dow, but not spectacular by any means. However, yield belies the real story with McDonald's, the world's largest fast-food chain. In the past five years, shares of McDonald's are up more than 75%. Over the past decade, the company has boosted its dividend by an average of more than 27% per year. Not to mention, McDonald's has increased its dividend for 35 years in a row.
Williams Partners L.P. (WPZ):
These days, no dividend portfolio would be complete without a master limited partnership or two. MLPs offer not only significant tax advantages, but robust dividends and yields, as well. Oklahoma-based Williams doesn't do anything sexy. Its primary business is moving oil and natural gas across the U.S. via pipeline. However, the company yields almost 5.6% and has increased its distribution for eight consecutive years.
BOK Financial (BOKF):
Sticking in Oklahoma, we have BOK Financial. The company operates over 200 bank branches in eight states, which means it's nowhere near the same size as a Bank of America (BAC) or J.P. Morgan Chase (JPM). That's a good thing. BOK's payout ratio is just over 27%, indicating the company isn't struggling to meet its dividend obligations. In fact, BOK has raised its dividend twice in the past year and every year for the past seven.
BP Prudhoe Bay Royalty Trust (BPT):
Just as MLPs are energy securities with large dividends and appealing tax advantages, the same goes for royalty trust. While BP Prudhoe Bay Royalty Trust has a large payout ratio, that's par for the course with royalty trusts and it's not a cause for alarm as the company has debt/equity ratio of zero and a long-term debt equity ratio of zero. The current yield is 8.2% and the current payout is a jaw-dropping $9.75 per unit. All this with a beta that is a third less than the S&P 500.