Dividend Recap: Most Notable Increases

by: The Value Investor

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 (NYSE: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 (NYSE: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 (NASDAQ: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 (NYSE: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 (NYSE: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 (NASDAQ: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.