Many dividend investors ignore stocks which have low current yields. It is interesting to note however that many low yielding stocks frequently are able to raise dividend payments faster while growing the business, which translates into higher stock prices over time. The rising stock price offsets the effect of the increasing dividend payments, leaving the current yield low. The yield on cost for original investors however could get to a very respectable level after a series of consistent dividend increases.
Several of this week’s dividend increases show companies which are not yielding much today, but have the power to grow distributions over time to an above average yield on cost:
Bank of the Ozarks, Inc. (OZRK) operates as the bank holding company for Bank of the Ozarks that provides a range of retail and commercial banking services. The board of the directors of the bank announced a 7.10% increase in its quarterly dividend to 15 cents/share. The company is a member of the dividend achievers index, after raising distributions for 12 consecutive years. The stock yields 1.60%. An investment at the end of 1999, when the stock yielded 2%, would have generated a yield on cost of 12.31%.
The TJX Companies, Inc. (TJX) operates as an off-price retailer of apparel and home fashions in the United States and internationally. The company raised its quarterly dividend by 25% to 15 cents/share. This was the 14th consecutive annual dividend increase for this dividend achiever. The stock currently yields 1.30%. An investment at the end of 1999, when the stock yielded 0.70%, would have generated a yield on cost of 5.90%.
Tanger Factory Outlet Centers, Inc. (SKT) engages in acquiring, developing, owning, operating, and managing factory outlet shopping centers. The company increased its quarterly distributions by 1.30% to 38.75 cents/share. This was the seventeenth consecutive year of annual dividend increases for this dividend achiever. The stock yields 3.60%. An investment at the end of 1999 , when the stock yielded 11.60% , would have generated a yield on cost of 15%.
Monro Muffler Brake, Inc. (MNRO) provides automotive undercar repair and tire services in the United States. The company’s board of directors authorized a 28.60% dividend increase to 9 cents/share. This will be the fifth consecutive year of annual dividend increases for the company. The stock yields 1%. An investment at the end of 1999, when the stock did not pay a dividend, would have generated a yield on cost of 10.80%.
IDEX Corporation (IEX) engages in the manufacture and sale of an array of pumps, flow meters, other fluidics systems and components, and engineered products worldwide. The company raised its quarterly dividend by 25% to 15 cents/share. This is the first dividend increase since 2007. The stock yields 1.80%. An investment at the end of 1999, when the stock yielded 1.80%, would have generated a yield on cost of 4.40%.
Entergy Corporation (ETR) engages in electric power production and retail electric distribution operations. The company raised its quarterly dividends by 10.70% to 83 cents/share. This was the first dividend increase since 2007. The stock yields 4%. An investment at the end of 1999, when the stock yielded 4.70%, would have generated a yield on cost of 12.90%.
Full Disclosure: None
- Why do I like Dividend Achievers
- Yield on Cost Matters
- Seven Dividend Stocks in the News
- Bank Shareholders: Forget About Dividend Increases
As we all know, the stock market is at an all time high. That is despite the fact that earnings for the US corporations have been flat for ...
As part of my portfolio monitoring process , I evaluate the list of dividend increases every week. It is helpful to monitor how my investmen...
The ultimate goals of everyone reading this site is to retire wealthy and to stay retired. Financial independence provides flexibility, fre...
Many of you are aware that I have been a big fan of tax-deferred investing over the past three – four years. After my awakening moment in l...
Right now, many investors are sitting on huge unrealized gains in the companies they have bought years ago. I am in those shoes too. However...
After observing market behavior for 20 years, I have come to the conclusion that many investors do not have a clue about how to make money i...
It seems like international investing is all the rage these days. It seems like everywhere I look, someone is recommending investors to add ...
Medtronic plc manufactures and sells device-based medical therapies worldwide. Over the past week, dividend champion Medtronic raised its ...
I do not like it, when my dividend paying companies are acquisition targets. Last week, shares of Hershey (HSY) increased to an all-time ...
General Mills, Inc. (GIS) manufactures and markets branded consumer foods in the United States and internationally. It also supplies branded...