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Companies That Give Shareholders a Raise
Posted by: Dividend Mantra (IP Logged)
Date: February 14, 2014 09:42AM

As a dividend growth investor, one of the primary objectives I seek is passive dividend income from my investments that increases over the rate of inflation, annually. It's always wonderful news when companies decide to reward loyal long-term shareholders with a dividend raise. Dividend raises typically mean operations are doing well and management is confident enough about cash flows to give shareholders a raise. All in all, it's a good sign.

I try to keep my eyes peeled for dividend raises from companies I'm invested in, as well as companies on my watch list. Some recent dividend increases include:

PepsiCo, Inc. (PEP) just boosted its quarterly dividend from $0.5675 per share to $0.655. This amounts to a 15.4% raise for shareholders, which is fantastic. Pepsi now has 42 years of dividend growth under its belt, and with a healthy payout ratio of 61.5% there should be plenty of dividend raises in the future. Shares now yield 3.29%, which is rather attractive in this market from a high quality company like Pepsi. The company also announced plans to increase its share buyback program to nearly $5 billion in 2014. Overall, not much to dislike here from Pepsi. I continue to view this company as a core holding for me.

Digital Realty Trust, Inc. (DLR) recently gave shareholders a raise on the order of 6.4%, with a new quarterly dividend payout of $0.83 per share over the old rate of $0.78. This is a rather stout raise considering that DLR shares now yield 6.2% based on the new payout. I purchased shares in DLR as it continued to slide last year, reaching new low after new low. But I was confident in the REIT back then, and I remain so now. This is now 10 years of consecutive dividend growth for the trust, and I see no real reason this won't continue for the foreseeable future. However, as a tech play on demand for cloud computing I'd like for my position in DLR to remain relatively small.

Stryker Corporation (SYK) increased its quarterly per share dividend by 15.1%, now paying out $0.3050. This represents an increase of $0.04 over the old dividend of $0.2650. Another very solid increase here, and SYK has increased its dividend for 21 consecutive years. The yield on the new payout is 1.47%. I've never taken a good look at Stryker because its yield is usually too low for me to consider it as a potential investment based on my income requirements, but the company continues to reward shareholders very well and I do quite like the business model of medical equipment. This is definitely a company I'd like to take a look at.

Cisco Systems, Inc. (CSCO) upped its quarterly dividend to $0.19 per share, an increase of 11.7% over the old dividend payout of $0.17 per share. This is the 4th dividend increase for Cisco since it initiated a dividend back in 2011. Although the yield on shares is now an attractive 3.4%, after getting burned by Intel's recent lack of dividend growth and clarity after years of strong raises I'm a bit leery of tech plays like Cisco. However, Cisco does appear to be setting a precedent here with consistent dividend growth, so this is definitely one to watch. The company will have to remain on the cutting edge to make sure cash flow can continue to support a rising dividend, and tech can be quite fickle.

Occidental Petroleum Corporation (OXY) just gave shareholders a great boost in income by raising its quarterly per share dividend by $0.08, which represents a 12.5% increase. The new dividend is now $0.72 per share, over the old rate of $0.64. I remain heavily allocated to energy, so I haven't yet taken a good look at OXY yet. I took a quick peek at the company a year ago or so and was concerned about executive compensation and haven't revisited this idea since. The company now has 12 years of dividend growth and continues to grow the dividend at a robust rate. The yield on the new dividend payout is 3.12%, and the dividend appears to be well covered with a payout ratio of 50%.

Own a piece of any of the above companies? Happy with the dividend raises?

Full Disclosure: Long PEP, DLR

Thanks for reading.



Stocks Discussed: PEP, DLR, SYK, CSCO, OXY,
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