Many investors are being sold on the idea of generating income in retirement by solely focusing on fixed income securities. That way they would have a stable income pretty much for life and there is a high likelihood that the principle would be returned intact after the bond matures. The main problem with this strategy is that while the income would remain unchanged over time, its real purchasing power would decline. If however investors purchased a diversified list of dividend growth stocks, they would be able to generate enough income and also enjoy the growing stream of distributions over time. That way investors would not have to worry too much about inflation eroding the purchasing power of their passive income. By focusing on such lists as dividend aristocrats, dividend achievers and checking the list of dividend increases regularly, investors could find the right dividend picks for their portfolios.
The following companies announced dividend increases last week:
Universal Corporation (UVV), which operates as the leaf tobacco merchants and processors worldwide, increased its quarterly dividend by 2.2% to 47 cents per share. Universal Corporation is a dividend champion, which has raised distributions for 39 years in a row. In addition to that the company’s Board of Directors approved a program for the repurchase of up to $150 million of the company’s common stock, which represents approximately 3% of its outstanding shares issued at current prices.The stock currently yields 4.50%.
Kimco Realty Corporation (KIM), which engages in acquisitions, development, and management of real estate properties, increased its quarterly distributions to 16 cents per share. Kimco Realty Corporation cut its dividends in 2009 from 44 to 6 cents/share after 16 years of consistent increases. The stock currently yields 5.40% based off the new distribution amount.
Microchip Technology (MCHP), which develops and manufactures semiconductor products for
various embedded control applications, increased its quarterly dividend by a nominal amount from 33.9 to 34cents per share. Microchip Technology has raised distributions since 2002. Despite the appealing yield of 5.60% and the possibility for gaining diversification in the technology sector, the high payout ratio is a red flag at the moment.
Aaron's, Inc. (AAN) which operates operates as a specialty retailer of consumer electronics, computers, residential and office furniture, household appliances, and accessories, increased its quarterly dividend by 5.9% to 1.8 cents per share. Aaron's, Inc has only raised distributions since 2003. In addition to that the stock currently yields only 0.30%. With EPS of $1.58 in 2008, the company could definitely afford to set up its dividend payments to shareholders a notch.
Of all the stocks raising dividends last week, only Universal Corporation (UVV) looks like an interesting and attractively valued stock that I will consider for further research. Thus do not margin your way into the stock. One problem is that since I already have an allocation to tobacco stocks like Altria (MO) as well as Philip Morris International (PM) however, I do not want to be over allocated to tobacco stocks in general.
Full Disclosure: Long PM and MO
- The case for dividend investing in retirement
- Dividends Stocks versus Fixed Income
- The Hyperinflation Scam
- Philip Morris International versus Altria
One of the advantages of being a dividend investor is that I invest in businesses that meet a certain qualitative and quantitative criteria...
I like to invest in quality companies, with an established track record of dividend increases. I want to acquire these quality companies at ...
This guest post has been written by Mike McNeil, passionate investor, founder of Dividend Stocks Rock and author of The Dividend Guy Blog ...
A dividend king is a company that has managed to increase dividends every single year for at least 50 years in a row. There are only 20 com...
I wanted to thank you all for reading the Dividend Growth Investor website. This site is a result of my efforts to improve my investing over...
Another year has passed here in dividend growth investing land. This was a year with a lot of changes for me. It is time to evaluate what ha...
Today marks the ninth birthday of the Dividend Growth Investor blog. It is unreal that I have managed to keep this up for 9 years in a row. ...
CVS Health Corporation (CVS), together with its subsidiaries, provides integrated pharmacy health care services. It operates through Pharmac...
The J. M. Smucker Company (SJM) engages in manufacturing and marketing branded food products primarily in the United States, Canada, and int...
Medtronic, Inc. (MDT) manufactures and sells device-based medical therapies worldwide. This dividend champion has paid dividends since 1977...