Saturday, August 21, 2010

Why Dividend Increasing Stocks are the Way to Go

What Stock has Raised its Dividends for 54 Years in a Row?

Over the course of the last few years, the Dow Jones has lacked consistency, presenting a volatile platform of figures that are making investors ever more hesitant. What market analysts are now seeing is the growth and solidarity contained in dividend stocks, exposing growth stocks as being somewhat precarious.

Mark Skousen, editor of the Forecasts & Strategies newsletter, said at the San Francisco Money Show a couple days ago that over long periods of time, dividend stocks outperform non-dividend stocks, and dividend-increasing stocks outperform dividend stocks in general. This finding is not being ignored as dividend investors see a much better long-term return when investing in dividend stocks, especially those that increase their dividends regularly.

One of the main reasons why dividend increasing stocks are proving to be so much more lucrative is that they embody a select group of companies which have enough in earnings to reinvest back into the business itself, but have plenty left over to distribute to shareholders. Rising profits also means rising dividends for shareholders, which ultimately equates to rising stock prices in the long term.

During the last few months, while some of the major players have been looking rather shaky, companies that have increased their distributions are causing analysts and investors to re-think their choice of investments. has turned up a list of over 20 stocks that have had dividend increases over 30 years. One company has increased its dividend every year for 54 years! Can you guess which company it is?

I can almost guarantee that you use at least one of their products on a regular basis. You have either shaved with them, brushed with them, flossed with them, wiped with them, shampooed with them, or washed with them. The company was founded in 1837, so it's been around for a little while, and appears to have some staying power. Probably that staying power is do to the fact that people will always brush, wash, and wipe, whether there is a recession, a depression, a booming economy, deflation, or inflation.

Have you guessed the name of the company yet? If not, I'll tell you. It's Procter & Gamble Co. (PG), which raised its dividend from 44 cents a share to $0.482 per share, a 9.5% increase. And this was during our current recession. The company has been paying a dividend for 120 consecutive years since its incorporation in 1890 and has increased its dividend for 54 consecutive years at an annual compound average rate of approximately 9.5%. Currently, the stock provides a yield of 3.2%, and trades at 13.8 times forward earnings.

Another company, which provided its shareholders with a huge dividend increase, is Walgreen Co. (WAG), the drug store chain. They just boosted the payout from $0.138 per share to $0.175 per share each quarter, an enormous increase of 28.6%. But what is even better is the history behind the company's dividends, providing its shareholders with dividend bump-ups for 35 years straight; and as long a people continue to need medicine and prescriptions, the company should continue to raise dividends. The stock now yields 2.5% and has a forward PE ratio of 11.5.

Of the stocks that have been raising dividends 30 years or more, seven of them have yields above 3%, and 17 have yields above 2%. For a free list of dividend increasing stocks, which can be downloaded, sorted, and changed, visit

Author does not own any of the above.


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