Dividend activity has picked up lately as companies begin to regain some sense of stability in the state of the economy, and visibility of future earnings growth. The iShares Dow Jones Select Dividend , an exchange-traded fund that tracks the Dow Jones U.S. Select Dividend Index, is up nearly 10 per cent so far in 2010.
There are several advantages to investing in dividend stocks for market watchers with long-term investment plans.
Most simply, dividend stocks allow investors to make money with capital gains and with the dividend payments themselves, explained Dividend.com, a financial services website that notes "dividend stocks are not a get-rich-quick scheme" for day traders but are key to growing capital over longer periods of time, usually for several years.
Capital gains are booked as a stock's value rises. Dividend payments are awarded to shareholders, usually on a quarterly basis.
Here then is a breakdown of 10 dividend stocks increasing their shareholder payouts in recent weeks, ranked by average volume.
1. Johnson Controls , a provider of batteries for cars and hybrid electric vehicles, said Wednesday its board approved a 23.1 per cent increase to its quarterly dividend. The Milwaukee-based company will pay shareholders 16 cents per share on Jan. 4, 2011 to holders of record on Dec. 10. Based on the higher payout, investors can expect Johnson Controls' dividend yield to be around 1.7 per cent.
"Johnson Controls is committed to providing shareholder value, and the increase of our dividend is reflective of our financial performance and our confidence in delivering record earnings in 2011 and the future growth of the company," said CEO Stephen A. Roell. "We are proud of our legacy of paying consecutive dividends since 1887 and being able to reward our shareholders with a significantly higher dividend."
The company also told investors to expect even larger payouts "over the next several years."
On Thursday, Johnson Controls and Tokyo-based Hitachi (HIT_) announced an agreement to work together in an effort to advance energy storage.
2. Prudential Financial will reward its shareholders with a 64.3 per cent higher annual dividend payment.
The Newark, N.J.-based financial services company said earlier this month it will pay its investors an annual dividend of $1.15 per share, up from its prior payout of 70 cents per share. The new dividend will be paid on Dec. 17 to shareholders of record on Nov. 23. Prudential's increased dividend brings its yield to 2.1 per cent.
On Wednesday Prudential said it had completed a secondary public offering of 18.3 million shares of its common stock, raising around $970-million. Prudential plans to use the net proceeds of the offering to fund its previously announced acquisitions of AIG Star Life Insurance and AIG Edison Life Insurance from American International Group. Prudential agreed in late September to buy the Japan-based units from AIG for $4.8-billion, including $4.2-billion in cash and $600-million in the assumption of third-party debt. The deal is expected to close in the first three months of 2011.
3. Toymaker Mattel increased its annual dividend by 10.7 per cent to 83 cents per share.
The maker of children's toys under the Barbie, Tyco and High School Musical brands said Wednesday the 2010 dividend is payable on Dec. 16 to shareholders of record on Dec. 3.
That brings its yield to 3.3 per cent.
Mattel also said that it plans to begin paying quarterly - rather than annual - dividends, beginning in fiscal year 2011. The company plans to declare its quarterly dividends during quarterly earnings announcements.
Mattel has increased its share repurchase program by $500-million. The repurchases will take place from time to time depending on market conditions, the company said. The El Segundo, Calif. company has already repurchased about 117 million shares of common stock for about $2.3-billion. The program is part of a broader capital and investment plan announced in Feb. 2003.
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- iShares Select Dividend ETF$73.49-0.82(-1.10%)
- Johnson Controls Inc$34.25-0.65(-1.86%)
- Prudential Financial Inc$58.75-5.31(-8.29%)
- Mattel Inc$30.07-0.18(-0.60%)
- Lincoln National Corp$31.95-2.33(-6.80%)
- Comerica Inc$31.11-0.94(-2.93%)
- Baxter International Inc$36.00-0.91(-2.47%)
- Sysco Corp$42.47-0.24(-0.56%)
- AmerisourceBergen Corp$84.51-1.09(-1.27%)
- Automatic Data Processing Inc$79.59-1.24(-1.53%)
- Updated February 11 10:26 AM EST. Delayed by at least 15 minutes.