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Friday, October 14, 2011

7 Stocks Increasing The Compounding Power Of Dividends

Too often we take a short-term approach, to our long-term detriment. There is a reason we don't see infomercials selling dividend growth investment strategies. For those looking to get rich now, a disciplined approach to investing that focuses on the long-term simply isn't appealing. if I knew in my 20's or 30's what I know now about dividend growth stocks, I would likely be retired now. The compounding power of growing dividends is tremendous.


Below are several companies that are demonstrating the power of compounding dividends by increasing their cash dividends:

Bassett Furniture Industries, Incorporated (BSET) engages in the manufacture, marketing, and retail of branded home furnishings in the United States. October 13th the company increased its quarterly dividend 16.7% to $0.035 per share.The dividend is payable on December 1, 2011, to shareholders of record at he close of business November 15, 2011. The yield based on the new payout is 1.8%.

Albemarle Corporation (ALB) develops, manufactures, and markets engineered specialty chemicals in the United States and internationally. October 13th the company increased its quarterly dividend 6% to $0.175 per share. The dividend is payable January 1, 2012 to shareholders of record at the close of business as of December 15, 2011. The yield based on the new payout is 1.5%.

Costamare Inc. (CMRE) owns and charters container ships to liner companies. October 11th the company increased its quarterly dividend 85 to $0.27 per share. The dividend is payable on November 7, 2011 to stockholders of record at the close of trading on October 21, 2011. The yield based on the new payout is 8.9%.

Paychex, Inc. (PAYX) provides payroll, human resource, and benefits outsourcing solutions for small to medium sized businesses. October 11th the company increased its quarterly dividend 3.2% to $0.32 per share. The dividend is payable November 15, 2011 to shareholders of record November 1, 2011. The yield based on the new payout is 4.6%.

Plains All American Pipeline, L.P. (PAA) engages in the transportation, storage, terminalling, and marketing of crude oil, refined products, and liquefied petroleum gas and other natural gas-related petroleum products. October 11th the company increased its quarterly distribution 1.3% to $0.995 per unit. This is the partnerships its 28th increase in the past 30 quarters. The yield based on the new payout is 6.5%.

Rimage Corporation (RIMG) provides workflow-integrated digital publishing systems that are used by businesses to produce recordable CD, DVD, and blu-ray discs with customized content and durable disc labeling. October 10th the company increased its quarterly dividend 70% to $0.17 per share. The dividend is payable on December 15, 2011 to shareholders of record on November 30, 2011. Based on the closing price on Friday, October 7, 2011. The yield based on the new payout is 5.9%.

West Pharmaceutical Services, Inc. (WST) manufactures and sells components and systems for injectable drug delivery and plastic packaging, and delivery system components. October 7th the company increased its quarterly dividend 5.9% to $0.18 per share. The dividend is payable on November 2, 2011 to shareholders of record on October 19, 2011. The increase is the eighteenth consecutive annual increase in the Company's quarterly dividend. The yield based on the new payout is 1.9%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: No position in aforementioned securities. See a list of all my dividend growth holdings here.

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- What Determines A Dividend Stock's Yield
(Photo Credit)

Tags: [BSET] [ALB] [CMRE] [PAYX] [PAA] [RIMG] [WST]

1 comment:

  1. i find that there is a sweet spot in terms of what kind of original yield you are looking for. i tend to think those that are 5-6% original and growing at 4% per annum are a good catch.

    would a 1.8% yield be able to consistently grow at that rate? shouldn't we estimate based on the terminal growth rate?

    a clearer illustration here is a table showing the difference between no reinvestment, reinvestment and reinvestment with growth >> http://www.investmentmoats.com/money-management/how-to-make-the-power-of-compounding-work-in-dividend-income-investing/

    The three returns after 20 years for $1k is $1200 vs $2399 vs $3445. Big diff

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