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Attention Shoppers: Retail Dividends Looking Strong

|Includes: COST, FDO, GPS, HD, JWN, LOW, TIF, TJX, TPR, Walmart Inc. (WMT), WSM

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With more than more than 25% of the S&P 500 raising dividends this year, investors have their pick of sectors from which to shop for newly increased payouts. While big financials have continued to sit on the sidelines when it comes to increased dividends, some sectors have shined, including consumer staples and energy. Another stalwart among the dividend boosters has been the retail sector. Both high-end retailers and their less pricey brethren have been among the more prolific dividend boosters in 2010.

About: Wal-Mart (NYSE: WMT), Family Dollar (NYSE: FDO), Costco (Nasdaq: COST), (NYSE: WSM), Lowe's (NYSE: LOW), Home Depot (NYSE: HD), Williams Sonoma (NYSE: WSM), Gap (NYSE: GPS), TJX Cos. (NYSE: TJX), Nordstrom (NYSE: JWN), Coach (NYSE: COH), Tiffany (NYSE: TIF)
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Wal-Mart (NYSE: WMT), the world's largest retailer, announced an 11% dividend increase in March. Wal-Mart has steadily been increasing its payout every year since 1974. Another discount retailer, Family Dollar (NYSE: FDO), boosted its dividend in January, marking the 33rd consecutive year Family Dollar has ratcheted its payout higher. Of course we cannot forget about Costco (Nasdaq: COST), the largest operator of warehouse stores in the U.S., announcing a 14% increase to its quarterly dividend.

Towards the higher end of the retail spectrum, Williams Sonoma (NYSE: WSM) has announced not one, but two dividend increases this year. The company also announced a $60 million share buyback in late May. Lowe's (NYSE: LOW), the second-largest home improvement retailer, announced a 22% increase to its quarterly dividend late May. Lowe's rival and Dow component Home Depot (NYSE: HD) announce a dividend increase in February.

Apparel retailers have joined in the party as well with Gap (NYSE: GPS) announcing an 18% to its annual dividend in February accompanied by plans for a $1 billion share repurchase program. TJX Cos. (NYSE: TJX), the operator of the Marshalls and TJ Maxx discount retail stores, said in April it will boost its quarterly dividend by 25% to 15 cents a share, marking the 14th straight year the company has raised its dividend.

Retailers of glamorous and glitzy items have also proven to be fertile ground for dividend hunters. Seattle-based Nordstrom (NYSE: JWN) said in May it would unveil its first dividend increase since 2007, raising its quarterly payout 25% to 20 cents a share. Coach (NYSE: COH) doubled its dividend in April after announcing its first-ever payout in April 2009.

Of the high-end group, Tiffany (NYSE: TIF) is the name that really shines. The purveyor of the famous blue boxes and expensive diamonds announced an 18% increase to its quarterly dividend in January along with saying it would reinstate a share repurchase plan with $402 million left on it. Tiffany followed that up by announcing a 25% increase to its quarterly dividend in May.

Overall, 2010 has been a solid year for dividend increases among retailers and we would expect that trend to continue if the economic recovery continues in earnest and the employment picture brightens.



Disclosure: no positions