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sagitarius84 (33.79)

May 2010

Recs

7

Why Dividend Growth Stocks Rock?

May 25, 2010 – Comments (6) | RELATED TICKERS: CLX , BG , CP

According to Ned Davis Research, $100 invested in all dividend payers of the S&P 500 index in 1972, would have grown to $2,266 by the end of 2009. The same $100 invested in non-dividend paying stocks in the S&P 500 returned a negative 39% over the same period. The performance of dividend payers and initiators was even better, returning $2,945 on the initial investment in 1972. Dividend investors should utilize every edge they could find in order to deliver above average total returns. As a result, the findings of the Ned Davis study should not be ignored. The reason why dividend growers outperform is that Continue Reading...  [more]

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4

Exxon Mobil (XOM) Dividend Stock Analysis

May 24, 2010 – Comments (2) | RELATED TICKERS: XOM , CVX , BP

Exxon Mobil Corporation engages in the exploration, production, transportation, and sale of crude oil and natural gas. The company is a component of the S&P 500, Dow Jones Industrials and the Dividend Aristocrats indexes. Exxon Mobil has been consistently increasing its dividends for 28 years in a row.

Over the past decade this dividend stock has delivered an annual average total return of 8% to its shareholders.
At the same time company has managed to deliver a 6.40% average annual increase in its EPS since 2000. The forecasts for the foreseeable future are for a 45% increase in the EPS in 2010 to $5.80/share, followed by an increase in EPS to a $7.27 by 2011. The sheer scale of the company gives it huge economies of scale. Its productivity is further boosted by the efficiency of developing new projects in Quatar, Norway and US. Exxon Mobil does business on over 200 countries and derives only 30% of its revenues from the US. The company has over 130 projects worldwide whose goal is to increase reserves of oil and natural gas. The company’s future acquisition of XTO Energy will boost natural gas production by over a quarter. XTO’s resources are close to the markets it serves. In addition to that technical expertise from XTO energy could assist Exxon Mobil in developing new shale fields worldwide.
The ROE had consistently increased from less than 15% in 2002 to over 38% in 2008, before dipping back to 17.30% last year on lower profitability.
Annual dividend payments have increased by an average of 7.30% annually since 2000, which is higher than the growth in EPS. Currently, the number of shares is lower than the number of shares at the time of the merger between Exxon and Mobil. The tremendous increase in commodities prices over the past decade has greatly contributed to the strength in earnings per share. A 7 % growth in dividends translates into the dividend payment doubling almost every ten years. If we look at historical data, going as far back as 1970, XOM has indeed managed to double its dividend payment every ten years on average. Just a few days ago Exxon boosted its dividend by 4.80% for the 28th year in a row.
The dividend payout has declined from a high of 57% in 2002 to a low of 17.8% in 2008., before increasing to 41.70% last year. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings. The company has returned money to shareholders exclusively through share buybacks, which are typically not as consistent as increases in dividends.

Overall Exxon-Mobil has low dividend payout ratio and a low P/E ratio of 14. In addition to that the stock yields 2.80%. I would appreciate it greatly if the company increases its payout of dividends over time at the expense of reducing its massive share buybacks. XOM has the potential to achieve an above average dividend growth over the next decade if oil prices increase over the next few year.In comparison Chevron Corporation (CVX) trades at a P/E multiple of 11 and yields 3.70%, while British Petroleum (BP) trades at a P/E multiple 8 while yielding 7.40%. I would consider adding to my position in Exxon Mobil as long as the stock is below $70.
Full Disclosure: Long BP, CVX and XOM

Relevant Articles:  [more]

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8

Dividend Payback from six quality dividend stocks

May 20, 2010 – Comments (1) | RELATED TICKERS: JNJ , PG , ED

When investors put their hard earned money to work, they are always hoping that they would receive a positive return on their investment. The profits could come either through capital gains, from dividends or from a combination of both. Dividends have traditionally been more stable than capital gain returns. Stock prices are volatile, and it would not be unheard of experiencing 40% losses in one year, which is then followed by 30% gains in the following year. That’s why many retirees these days are building their retirement income strategies exclusively off of dividend stocks.

The payback that these investors are targeting is mostly from the dividend income stream in order to estimate how long it might take to get their money back. Dividend payback is just that – how long it would take for the dividends from a stock investment to exceed the investment itself. Savers have two options – either go for a higher yielding but slower growing company or go for a stock with a lower current yield but has a huge dividend growth potential.

I compared the two strategies using a few stocks in my portfolio to illustrate my examples. In the first example I used electric utility Con Edison (ED). Right now the company is yielding 5.40%, which means that an investment in the company today could pay off for itself in 19 years. This estimate assumes limited dividend growth for the next two decades. I calculated it by dividing 100 by the current yield in order to come up with the number of years that it would take for the dividend checks to pay me back for the stock.

Based on this exercise, one might believe that in order for dividend checks to pay for the stock in the shortest amount of time possible, one should go for the high dividend stocks of the day. However even a small growth of 1% in the dividend payment however could shorten the time for the dividend payback to seventeen and a half years. If you are able to reinvest your dividends in the company, the payback would probably be even quicker.

That’s why I checked other stocks like Johnson & Johnson (JNJ) in order to estimate whether a low yield of 3% coupled with a dividend growth of 10% annually makes a difference. It seems that for an investment like that it would take fifteen and a half years in order to achieve a dividend payback. In fact if you had purchased Johnson & Johnson in 1994, the dividend income stream would have paid for the stock by 2009, without even reinvesting the dividends. The cost on your investment would have been returned to you, yet you would still maintain ownership.

Being a balanced investor I have highlighted six stocks which I believe would achieve a dividend payback of fifteen years. Some of the stocks mentioned below are high dividend stocks, while others are dividend growth stocks with good potential.

Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates through three segments: Consumer, Pharmaceutical, Medical Devices and Diagnostics. Johnson & Johnson has consistently increased dividends for 46 years in a row. The stock yields 3.40%. The yield on cost on stock purchased at the end of 1989 is 29.10%. (analysis)  [more]

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5

How to Uncover Hidden Dividend Gems

May 18, 2010 – Comments (2) | RELATED TICKERS: NC , FDS , MSA

Uncovering the best dividend stocks is a difficult process. It requires constant screening of the dividend achievers and dividend aristocrat indexes, in order to identify companies which are worth your time to further research. Research entails reading analysts reports, annual company reports, staying up to date on news in the industry and competitors in general and constantly evaluating whether the stock is worth your investment or not. If you find the right dividend stocks however, the rewards could be tremendous. Sometimes however certain stocks would not be widely followed by dividend investors, because of their small size. Another reason could be that they are very close to getting on the dividend achievers list, but are not there yet.

Several companies increased distributions over the past week. The companies include:

National Bankshares, Inc. (NKSH) operates as the bank holding company for The National Bank of Blacksburg (NBB), which provides various retail and commercial banking services to individuals, businesses, non profits, and local governments in Virginia. The company increased its semi-annual dividend by 7.3% to 44 cents/share. This was the tenth consecutive annual dividend increase for the company. The stock yields 3.10% and has a dividend payout ratio of less than 50%.

Mine Safety Appliances Company (MSA) develops, manufactures, and supplies health and safety products used by workers in the fire service, homeland security, construction, and other industries, as well as the military. The company increased its quarterly dividend to 25 cents per share, an increase of about 4% over its prior dividend in February of 24 cents. This was the thirty-eight consecutive annual dividend increase for this dividend champion. The stock yields 3.40%.

FactSet Research Systems Inc. (FDS) provides financial and economic information, analytical applications, to investment professionals. The company’s board of directors approved a 15% increase in the quarterly dividend to 23 cents/share. This is the eleventh consecutive annual dividend increase for this dividend achiever. The stock yields 1.20%.

NACCO Industries, Inc.(NC), through its subsidiaries, engages in lift trucks, small appliances, specialty retail, and mining businesses primarily in the Americas, Europe, and the Asia-Pacific. The Board of Directors increased its regular cash dividend from 51.75 cents to 52.25 cents per share. This dividend achiever has raised distributions for 25 consecutive years. The stock yields 2%.

For the above stocks, I typically require a current dividend yield of at least 2.50% before I start researching them. For the stocks below, since they have not raised distributions for at least one decade, I would just keep an eye on them.

Assurant, Inc. (AIZ), through its subsidiaries, provides specialized insurance products and related services in North America and internationally. The company raised distributions by 7% to 16 cents/share. This is the sixth consecutive annual dividend increase for the company. The stock yields 1.80%.

Portland General Electric Company (POR) operates as an integrated electric utility in Oregon. The company raised dividends by 2% to 26 cents/share. This is the fourth consecutive annual dividend increase since 2006. The stock yields 5.30%.

Quaker Chemical Corporation (KWR) develops, produces, and markets formulated chemical specialty products for various heavy industrial and manufacturing applications. The company increased its quarterly dividend to $0.235 per share from $0.23/share. This was the first increase since 2008. The stock yields 3.30%.

CPI Corp.(CPY), through its subsidiaries, provides professional portrait photography services. The company declared a second quarter cash dividend of $0.25 per share, an increase of 56%. This was the first dividend increase since 2003. The stock yields 3.50%.

Cliffs Natural Resources Inc.(CLF) a mining and natural resources company, produces iron ore pellets, lump and fines iron ore, and metallurgical coal. The board of directors increased the quarterly cash dividend on the Company’s common shares by 60% to $0.14 per share. The stock yields 1%.

The Timken Company (TKR), together with its subsidiaries, manufactures engineered anti-friction bearings and assemblies, alloy steels, aerospace power transmission systems, and related products and services worldwide. The company raised its quarterly distributions by 44.40% to 13 cents/share. This isn’t too impressive however, given the fact that the company cut its distributions in half in 2009. Over the past decade the company has always managed to cut distributions whenever they reached 18 cents/share. The stock yields 1.60%.

Once again I was able to identify a hidden dividend gem, while browsing through the list of dividend increases. The hidden gem is called National Bankshares, Inc. (NKSH), which has decided to forgo taking any monies from the U.S. Treasury through the Capital Purchase Program due to its already strong capital position. I would be featuring a stock analysis of the stock in the future. I would not expect the company to be added to the dividend achievers index, particularly because its market capitalization is less than $200 million and it trades six thousand shares per day.

Full Disclosure: None

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- Seven Dividend Stocks in the News
- Hingham Institution for Savings (HIFS) Dividend Stock Analysis
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6

Clorox (CLX) Dividend Stock Analysis

May 17, 2010 – Comments (2) | RELATED TICKERS: PG , CLX , KMB

The Clorox Company engages in the production, marketing, and sales of consumer products in the United States and internationally. The company operates through four segments: Cleaning, Lifestyle, Household, and International.
Clorox has paid uninterrupted dividends on its common stock since it was spun out of Procter and Gamble (PG) in 1968 and increased payments to common shareholders every year for 32 years. The company is a member of the elite S&P Dividend Aristocrats Index.
Over the past decade this dividend growth stock has delivered an annual average total return of 4.30% to its shareholders.

  [more]

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4

Four Characteristics of The Best Dividend Growth Stocks

May 13, 2010 – Comments (1) | RELATED TICKERS: JNJ , BP , PG

Dividends provide investors with a return on investment even when markets are down. As a result investors get paid to hold their stocks through thick and thin. It is important however to pick a stock selection strategy that fits with your financial goals. A good entry strategy is just the beginning however. Investors should also be following the strategy at all times in order to be successful.

Four important characteristics of successful dividend portfolios include entry and exit criteria, diversification, dollar cost averaging and selective dividend reinvestment.

Entry/Exit Criteria

Under my current entry criteria I am looking for companies which have consistently boosted annual distributions for at least one decade. The next step is screening whether the dividend is adequately covered, and that the dividend payout ratio does not exceed 50%. The only exception to this rule is for certain special investment vehicles such as Master Limited Partnerships, Real Estate Investment Trusts or Utilities, where I look at the trend of the dividend payout ratio. I also check to see whether there is earnings growth over the past decade and whether the company has any sustainable competitive advantage. Once the company yields more than 2.50%, has a price earnings ratio of less than 20 and has a dividend payout ratio of less than 50%, I initiate my position in the stock.

I would hold on to the stock as long as dividend payments keep getting increased regularly and would add to the position on dips. An example of an attractively valued dividend stock is Johnson & Johnson (JNJ). I would only consider selling if the dividend is cut for whatever reason. If the company stops raising the dividend I hold onto the stock, but I stop contributing new money. Currently the three stocks I have stopped contributing new money include M&T Bank (MTB), British Petroleum PLC (BP) and National Retail Properties (NNN). The three companies have failed to raise distributions for more than 4 consecutive quarters, which makes them a hold. An example of stocks I sold due to a dividend cut include American Capital (ACAS), which was sold in 2008 when it announced that it would no longer pay a quarterly distribution.

Diversification

Traditional dividend stocks included high yielding utility stocks and financials. Most financial stocks cut or completely eliminated dividends over the past two years. If investors should learn one lesson from the financial crisis of 2007 -2009, it should be to diversify your portfolio, in order to generate sustainable dividend income. Canadian Income Trust investors also learned a similar lesson in 2006, after the government decided to phase out the royalty trust corporate structure in 2011, sending stock prices and distributions per unit nose-diving. It is also important to own more than 30 stocks from as many sectors as possible, in order to prevent an unfortunate downturn in one sector or a few stocks from destroying your chances of generating sustainable dividend income. Owning more than 30 stocks makes your dividend portfolio less exposed to individual company risks, although you will still be exposed to overall market risk.

Dollar Cost Averaging

After selecting the stocks to include in your portfolio, it is important to spread your purchases as a precaution to avoid paying too high prices. Few if any investors could time successfully the exact highs and lows in the stock market, which is why having a consistent strategy of making prudent purchases every so often would be a good idea. Even high quality dividend stocks such as Procter & Gamble (PG) are not immune from market fluctuations. Dollar cost averaging would have been very beneficial to investors in 2007 and 2008, although a lump sum investment in 2009 would have been better.

Selective Dividend reinvestment

Dividends could be either sitting there or get reinvested. The beauty of dividends is that it is under the discretion of the individual investor to purchase more stock, buy equity in a different company/investment or spend it another way. I do re-invest only a portion of my stocks directly; most other times however I let my dividends accumulate and I either re-invest in the same stocks or in new stocks that have been on my watch list.

Full Disclosure: Long PG, MTB, BP, NNN, JNJ



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- Should you sell after a dividend freeze?
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3

Sixteen Dividend Companies focusing on the big picture

May 11, 2010 – Comments (1) | RELATED TICKERS: CAH , RLI , TAP

As a dividend investor, I purchase quality companies with solid competitive advantages, which can afford to raise dividends for many consecutive years. My holding period is theoretically forever, as long as the companies I own do not cut or eliminate their distributions. As a result my fortunes are closely linked with the underlying fundamentals of the business. If the business does well, I would keep getting paid. If my investments throw off enough income, there is no need to worry about short-term fluctuations in the stock price. Last Thursday’s action in the market, where stock indices fell by 10% in a matter of a few minutes, only to recover most of it a few minutes later, was a strong cause against relying on price returns for living off your portfolio. Focusing on market movements every few seconds is something that should be left to the sophisticated computer trading algorithms operated by investments banks on Wall Street. Dividend investing is more than relevant today, as it is one of the few strategies for main street investors to help them focus on the big picture and build wealth in the process.

During what was a turbulent week in the markets, several companies expressed enough confidence in their long-term prospects to boost distributions: Continue Reading...  [more]

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6

3M Company (MMM) Dividend Stock Analysis

May 10, 2010 – Comments (2) | RELATED TICKERS: MMM

3M Company, together with its subsidiaries, operates as a diversified technology company worldwide. It operates in six segments: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics; and Electro and Communications.

3M Company is a major component of the S&P 500 and Dow Industrials indexes. The company is also a dividend aristocrat, which has been consistently increasing its dividends for 52 consecutive years. Over the past decade this dividend growth stock has delivered an annual average total return of 7.90% to its shareholders.


At the same time company has managed to deliver an impressive 7.70% average annual increase in its EPS since 2000. In 2009 earnings per share fell by 7.60% to $4.52. The expectations for 2010 are for increase EPS to almost $5.15/share and an increase in EPS to $5.69 in 2011. Over the long run however, earnings for this conglomerate are relatively diversified which is a decent buffer during recessions. As the economy rebounds, revenues and profitability would improve. The company also invests almost 6% of its revenues in research and development each year, in order to deliver new products to consumers worldwide. Future growth is expected to also come from acquisitions as well as growth in emerging markets such as China and India. Sales are increasing partly due to strong demand of coatings for TV and Computer displays as well as demand for masks in response to the H1N1 virus.

The ROE has remained largely between 29% and 38% with the exception of a temporary dip in 2001 to 23%. After two years of declines in this indicator, I expect that increased profitability would lift returns in 2010.

Annual dividend payments have increased by an average of 6.50% annually since 1999, which is lower than the growth in EPS. Most recently the company increased its dividend by 3% to $0.525/quarter. MMM typically enjoys a slow dividend growth during tough economic conditions, while compensating with stronger dividend growth during boom times. 3M’s dividend is safe, given the strong cashflows that the company generates from its diversified businesses.


A 7 % growth in dividends translates into the dividend payment doubling almost every ten years. Since 1973 3M has actually managed to double its dividend payment on average almost every nine years.

The dividend payout has steadily decreased over the past decade; due to the fact the dividend growth was much slower than earnings growth. Currently the payout is at 45% which is a sustainable level. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.


3M is currently attractively valued. The stock trades at a P/E of 19.50, yields 2.40% and has an adequately covered dividend payment. I would be a buyer of 3M on dips below $84.

Full Disclosure: Long MMM

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- Four Prominent Dividend Growth Stocks with rising yields on cost
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3

Procter & Gamble: Long Term View

May 07, 2010 – Comments (2) | RELATED TICKERS: PG

It is volatile days like yesterday which make me happy that I am a long term dividend investor, not subject to the whims of program traders and trading errors. Relying on the consistent and growing dividends of quality dividend stocks is a sound way to make money in any market, without losing your mind.

Below you could find snapshots of the time and sales of Procter & Gamble (PG) stock from the lows today.  [more]

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3

United Technologies (UTX) Dividend Stock Analysis

May 06, 2010 – Comments (1) | RELATED TICKERS: UTX

United Technologies Corporation provides technology products and services to the building systems and aerospace industries worldwide.
United Technologies is a major component of the S&P 500 and Dow Industrials indexes. The company is also a dividend achiever, which has been consistently increasing its dividends for 16 consecutive years.

Over the past decade this dividend stock has delivered an annual average total return of 9.70% to its shareholders.


At the same time company has managed to deliver a 9.80% average annual increase in its EPS since 2000. Analysts are expecting an increase in overall earnings per share in 2010 to $4.60 and $5.30 in 2011.
The company is operating under 6 divisions, each of which provides different types of products or services. Its businesses include Carrier heating, air-conditioning and refrigeration solutions; Hamilton Sundstrand aerospace and industrial systems; Otis elevators and escalators; Pratt & Whitney engines; Sikorsky helicopters; and UTC Fire & Security systems. The company also operates a central research organization that pursues technologies for improving the performance, energy efficiency and cost of UTC products and processes.
United Technolgies is well positioned to ride any major megatrends such as emerging markets growth and demand for clean energy solutions and would also be positioned well for economic rebound due to its diverse offerings. One of its divisions, Hamilton Sundstrand, has been involved in the Boeing’s 787 Dreamliner project, by delivering nine systems that contributed to the successful first flight of the airplane.

The return on equity has remained largely between a low of 20% in 2005 and a high of 25% in 2008.

Annual dividends have increased by an average of 15.80% annually since 2000, which is much higher than the growth in EPS.A 15 % growth in dividends translates into the dividend payment doubling almost every five years. Since 1970 United Technologies has actually managed to double its dividend payment almost every eight years on average.

The dividend payout had largely remained below 30% over the past decade. In 2009 there was a spike in this ratio to 38% due to the impact of the recession on earnings per share and the 10.40% dividend increase last year. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.

United Technologies is currently attractively valued. The stock trades at a P/E of 18, yields 2.30% and has an adequately covered dividend payment. I would be a buyer of UTX on dips below $68.

Full Disclosure: Long UTX

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6

A record 22 companies boost dividend payouts

May 05, 2010 – Comments (2) | RELATED TICKERS: XOM , CVX , IBM

Over the past week twenty-two companies announced that they would be rewarding shareholders with higher dividend payouts. Several solid blue chip companies such as IBM, Costco and Exxon Mobil raised their payouts as well.

In order to make it easier to read through the list, I have separated the number of companies into three lists: Dividend Achievers and Dividend Aristocrats; Master Limited Partnerships; and Dividend Growth Stocks.

Dividend Achievers and Dividend Aristocrats

Dividend Achievers are companies which have boosted payouts for at least ten consecutive years. Companies that are members of the elite Dividend Aristocrats index, are members of the S&P 500 and have raised distributions for over a quarter of a century.

International Business Machines Corporation (IBM) is an information technology (IT) company. The company increased its dividend by 18% to 55 cents/share. This is the 15th year in a row that IBM has increased its quarterly cash dividend. This dividend achiever yields 2%. (analysis)

W.W. Grainger, Inc. (GWW) and its subsidiaries distribute facilities maintenance and other related products and services in the United States, Canada, Japan, and Mexico. The company raised its quarterly dividend by 17% from $0.46 to $0.54 per share. This is the thirty-ninth dividend increase in a row for this dividend aristocrat. The stock yields 2%. (analysis)

Exxon Mobil Corporation (XOM) engages in the exploration, production, transportation, and sale of crude oil and natural gas. The company raised its quarterly dividends to 44 cents/share, up from 42 cents/share. This is the twenty-eight consecutive annual dividend increase for this dividend aristocrat. The stock yields 2.60%. (analysis)

Chevron Corporation (CVX) operates as an integrated energy company worldwide. The company raised its quarterly dividends by 5.90% 72 cents/share. This is the twenty-third consecutive annual dividend increase for this dividend achiever. The stock yields 3.50%. (analysis)

Cullen/Frost Bankers, Inc., (CFR) through its subsidiaries, provides various banking and financial products and services primarily in Texas. The company increased its quarterly dividend by 4.70% to 45cents/share. This is the seventeenth consecutive annual dividend increase for this dividend achiever. The stock yields 3%.

Community Bank System, Inc. (CBU) operates as the holding company for Community Bank, N.A. that provides various banking and financial services to the retail, commercial, and municipal customers. It offers loans and accepts deposits. The Company’s Board of Directors approved a $0.02, or 9.1%, increase in its quarterly dividend on its common stock, to $0.24 per share. This is the seventeenth consecutive annual distribution increase for this dividend achiever. The stock yields 3.70%.

Master Limited Partnerships

Williams Partners L.P. (WPZ) is a limited partnership formed that owns, operates and acquires a portfolio of energy assets. This master limited partnership announced that the distribution its unit holders receive has been increased to $0.6575 per unit, a 3.5% increase over the previous dividend of $0.635. The partnership has consistently raised annual distribution since 2006. The units yield 6.30%.

Inergy Holdings, L.P. (NRGP) is engaged in the investment in propane and other natural gas liquids companies. This master limited partnership announced an increase in its quarterly cash distribution to $0.975 per limited partner unit, which was a 3.7% increase over the previously declared quarterly distribution. Inergy has boosted distributions since 2006. The stock yields 5.40%.

Holly Energy Partners, L.P. (HEP) operates a system of petroleum product and crude oil pipelines, storage tanks, distribution terminals, and loading rack facilities. This master limited partnership declared an increase in its distribution to $0.815 per unit, up from $0.805 that was distributed last quarter. Holly Energy Partners, L.P. has consistently boosted distributions since 2005. The units yield 6.90%.

Sunoco Logistics Partners L.P. (SXL) engages in the transport, terminalling, and storage of refined products and crude oil, as well as the purchase and sale of crude oil in the United States. The company increased quarterly distribution to $1.11 per share, from $1.09 prior. This master limited partnership has consistently raised distributions almost every quarter since 2002. The units yield 6.60%.

Alliance Holdings GP, L.P., (AHGP) through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. The company announced a boost in its quarterly distribution to 46.5 cents/share which represents a 12.0% increase over the $0.415 per unit distribution (for the quarter ended March 31, and an increase of 2.8% over the fourth quarter 2009 distribution of $0.4525 per unit. This master limited partnership has consistently boosted distributions since 2007. The units yield 5.60%.

Future Dividend Growth Stocks

EarthLink, Inc. (ELNK) is an Internet service provider (ISP), providing nationwide Internet access and related value-added services to individual and business customers. The company's Board of Directors has increased the amount of its quarterly cash dividend on its common stock from $0.14 per share to $0.16 per share. This is the first dividend increase since EarthLink initiated a dividend policy in 2009. The stock yields 7.40%.

Ameriprise Financial, Inc. (AMP) provides financial planning, products and services that are designed to be utilized as solutions for its clients' cash and liquidity, asset accumulation, income, protection, and estate and wealth transfer needs. The company raised its quarterly dividend from $0.17 to $0.18. The company has had higher annual dividend payments for four years in a row. The stock yields 1.50%.

Costco Wholesale Corporation (COST) operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. The company approved a quarterly increase from $0.18 to $0.205 per share. This is the sixth consecutive dividend increase since the company initiated a dividend policy in 2004. The stock yields 1.40%.

Kellogg Company (K), together with its subsidiaries, engages in the manufacture and marketing of ready-to-eat cereal and convenience foods. The Company's Board of Directors announced plans to increase the quarterly dividend by 8% to $0.405 per share beginning with the third quarter of 2010. This would have been the sixth consecutive dividend increase for the company. The stock yields 2.90%.

International Paper Company (IP) operates as a paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia, and North Africa. The company approved an increase in its quarterly common stock dividend from $0.025 per share to $0.125 per share. This is the first dividend increase since the company slashed distributions by 90% in 2009. The stock yields 1.70%.

Celanese Corporation (CE) is an integrated producer of chemicals and advanced materials. The company approved a 25% increase in the company’s quarterly dividend to $0.05 per share. The stock yields 0.60%.

Legg Mason, Inc., (LM) through its subsidiaries, operates as a diversified group of global asset management firm serving individual and institutional investors worldwide. The company’s Board of Directors has declared a quarterly cash dividend on its common stock in the amount of $0.04 per share which is a 33.33% increase over the previous dividend of $0.03. This is the first dividend increase for the company since it slashed dividends by 87.50 % in 2009 and lost its status as a dividend aristocrat after just one year in the elite index. The stock yields 0.50%.

Valmont Industries, Inc. (VMI) produces fabricated metal products; pole and tower structures; and mechanized irrigation systems in the United States and internationally. The board of directors increased the Company's quarterly cash dividend by 10% from $0.15 to $0.165 per share. This is the ninth consecutive annual dividend increase for the company. The stock yields 0.80%

Sturm, Ruger & Company, Inc. (RGR) engages in the design, manufacture, and sale of firearms in the United States. The company increased its quarterly dividend by 55% to 9.3 cents/share. The stock yields 2.10%.

TransAlta Corporation (TAC) operates as a non-regulated electricity generation and energy marketing company. The company raised its quarterly dividends by 6.40% to 29 cents/share. This is the third consecutive annual dividend increase for the company.The stock yields 5.60%.

Duff & Phelps Corporation (DUF), through its subsidiaries, provides independent financial advisory and investment banking services worldwide. The company increased quarterly dividend by 20% to $0.06 per share. This is the first dividend increase for the company since its started paying dividends in 2009. The stock yields 1.50%.

The list of dividend increases should not be viewed as a buy recommendation. Readers are advised to use it only as a starting reference point for further research, provided that any of those companies interest you.

Full Disclosure: Long CVX, GWW and XOM

Relevant Articles:

- Dividend Aristocrats List for 2010
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