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.
A regulatory filing published on Monday shows that billionaire Carl Icahn's hedge fund Icahn Capital bought 2.4 million shares of Mattel and 5 million shares of Masco in the third quarter. During the quarter, he also unloaded the rest of his shares in Yahoo and Wendy's Arby's. In 2008, Icahn waged a proxy battle against Yahoo! after the company declined Microsoft's buyout offer of up to $47.5-billion; he backed down after obtaining three seats on Yahoo's board.
4. Fast food chain operator Wendy's Arby's upped its quarterly cash dividend by half a penny per share to 2 cents. The higher dividend will be paid next on Dec. 15 to shareholders of record on Dec. 1. The higher payout brings Wendy's yield to 1.7 per cent. Atlanta-based Wendy's increased dividend was announced earlier this month even as Wendy's booked a surprise quarterly loss on weaker-than-expected revenue.
Wendy's also adjusted its forecast, saying 2010 results would likely be toward the low end of its previously announced guidance. "These third-quarter results are simply not satisfactory to us," conceded CEO Roland Smith, who said the quarter was "a difficult one" both for its Wendy's and Arby's brands of fast food restaurants.
5. Lincoln National said last week its board approved a 500 per cent increase to its quarterly dividend. The Radnor, Pen.-based insurer will pay its investors 5 cents per share on a quarterly basis, with the next payday on Feb. 1 to shareholders of record at the close of business on Jan. 10. Lincoln National also declared a regular dividend of 75 cents per share on its $3 Cumulative Convertible Preferred Stock Series A, payable March 5 to shareholders of record at the close of business on Feb. 11. Lincoln National also announced a plan to repurchase up to $125-million of its common stock over a 15-month period and to redeem all $150-million in outstanding 6.75 per cent Series F Trust Preferred Securities issued by Lincoln National Capital VI. Earlier this month analysts at Credit Suisse cut their estimates on Lincoln National through 2010, citing weaker group insurance underwriting and compressed universal life spreads. The firm maintained a neutral rating on Lincoln National's stock.
6. Comerica will reward its shareholders with a 100 per cent increase to its quarterly cash dividend. The Dallas bank will pay 10 cents per share on New Year's Day to its shareholders of record on Dec. 15. Comerica's higher payout brings it yield to 1.1 per cent.
Comerica was featured as one of TheStreet's 10 Banks Likely to Boost Dividends last week. In its dividend announcement made after Monday's market close, the company also said its board of directors had authorized the repurchase of up to 12.6 million shares - or roughly 7 per cent of Comerica's outstanding common stock - as well as warrants to purchase up to 11.5 million common shares.
7. Baxter International increased its dividend by 6.9 per cent. The medical equipment maker will pay its shareholders 31 cents per share. The higher dividend will be paid on Jan. 5 to holders of record on Dec. 10. That brings the Deerfield, Ill.-based company's yield to 2.4 per cent.
Baxter's dividend hike is part of its strategy to reward shareholders with its relatively strong cash flow.
In fiscal 2010 Baxter paid its investors around $2-billion, including $688-million in dividends and $1.3-billion in share repurchases. Late last month Baxter announced it would divest its U.S. generic injectables business to Jordan's Hikma Pharmaceuticals. The deal is valued around $112-million.
8. Sysco announced a dividend increase of 4 per cent last Friday. Houston-based Sysco said it will pay a penny more per share to its shareholders on a quarterly basis, paying 26 cents per share on Jan. 28 to holders of record at the close of business on Jan. 7.
The distributor of food and foodservice products recently posted better-than-expected fiscal first quarter revenue, but earnings came up short on a decline in gross profit margin and higher pension costs.
"We understand the importance of the dividend to our shareholders and are pleased to once again increase the annual dividend," said CEO Bill DeLaney. "Fiscal year 2011 will be the 42nd year in a row that we have paid a dividend to our shareholders - a testament to Sysco's consistently strong balance sheet and cash flow throughout the years."
9. AmerisourceBergen boosted its quarterly dividend by 25 per cent to 10 cents per share.
The distributor of pharmaceutical products and related health care services will pay the higher dividend on Dec. 6 to holders of record on Nov. 22, bringing its new yield to 1.3 per cent.
AmerisourceBergen was formed through the 2001 merger of Amerisource Health and Bergen Brunswig.
On Thursday the Chesterbrook, Penn.-based company tapped Steve Collis to serve as its new president and chief operating officer. Collis previously was executive VP of AmerisourceBergen and president of AmerisourceBergen Drug, a subsidiary. AmerisourceBergen recently posted a 115.1 per cent increase in quarterly revenue to $49.9-million. Quarterly profit jumped 103.9 per cent to $1.7-million. As of September 30, the company had $7.3-million in cash and $52.5-million in government and bank debt.
10. Automatic Data Processing's board approved a 5.9 per cent increase to its quarterly cash dividend. The private payrolls firm will pay investors 36 cents per share, to be paid next on Jan. 1 to holders of record on Dec. 10. The increased dividend brings ADP's yield to 3.2 per cent.
On Wednesday ADP announced it had completed the acquisition of Byte Software House, an Italy-based provider of integrated payroll, personnel administration, time management and human resources products and services.
In October ADP updated its fiscal 2011 guidance, saying it now expects total revenues to grow between 3 per cent and 5 per cent revenue growth, up from its prior forecast of 1 per cent to 3 per cent growth, due to positive results achieved during the first fiscal quarter of 2011. Including acquisitions closed during the quarter, it anticipates 7 per cent to 8 per cent revenue growth.
ADP now expects to post earnings per share growth between 3 per cent and 5 per cent in fiscal 2011, or between $2.44 and $2.49 per share, up from its prior forecast for EPS growth in the 1 per cent to 3 per cent range.
Follow us on Twitter: