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
The S&P Dividend Aristocrats index is an elite group of companies, members of the S&P 500, which have managed to increase dividends ...
I just received notification that low cost broker Loyal3 is shutting down, effective May 22 2017. Loyal3 was a decent commission free alte...
In a previous article I discussed that I am on track to have my dividend income cover my expenses sometime around 2018 . I received a few qu...
As part of my monitoring process, I review the list of dividend increases every week. I usually focus my attention to companies that have r...
Last week, I shared the 2017 list of dividend aristocrats . The most common question I received focused on which companies are attractively ...
I look at the list of dividend increases every week, as part of my monitoring process. I then narrow the scope by focusing on companies tha...
This guest post has been written by Mike McNeil, passionate investor, founder of Dividend Stocks Rock and author of The Dividend Guy Blo...
Successful dividend growth investing relies on finding companies at an attractive price which can grow earnings and dividends over time. A...
People usually get emotional when the topic of rent versus buy is brought up. One group swears by owning a home, and believes that it is a g...
The Procter & Gamble Company (PG) provides branded consumer packaged goods to consumers in North America, Europe, the Asia Pacific, Ind...