Monday, August 21, 2017

6 Stocks Building Superior Long-Term Returns With Increased Dividends

Ned Davis Research examined the relative performances of stocks between 1972 and 2006 and established a link between rising dividends and superior long-term returns. The study found S&P 500 stocks that consistently increased their dividends returned 10.4% total return (dividends + share price appreciation), while those that did not increase their dividends returned only 8.2%. The 2.2% advantage of the dividend raisers would equate to an additional $1,802 per $100 invested in 1972.

Below are several companies looking to follow the the path of superior long-term returns by increasing their cash dividends:

Kansas City Southern (KSI) has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. Recently the company increased its quarterly dividend 9.1% to $0.36 per share. The dividend is payable October 4, 2017 to stockholders of record on September 11, 2017, with an ex-dividend date of August 8, 2017. The yield based on the new payout is 1.4%.

Dillard's, Inc. (DDS) is a retailer of fashion apparel, cosmetics and home furnishing operating 293 Dillard's stores, including 25 clearance centers, and an Internet store offering a selection of merchandise, including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods. Recently the company increased its quarterly dividend 43% to $0.10 per share. The dividend is payable October 30, 2017 to stockholders of record on September 29, 2017, with an ex-dividend date of September 28, 2017. The yield based on the new payout is 0.7%.

ResMed Inc. (RMD) that is engaged in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders. Recently the company increased its quarterly dividend 6.1% to $0.35 per share. The dividend is payable September 21, 2017 to stockholders of record on August 17, 2017, with an ex-dividend date of August 15, 2017. The yield based on the new payout is 1.9%.

Pinnacle Foods Inc. (PF) is a manufacturer, marketer and distributor of branded food products in North America. Recently the company increased its quarterly dividend 14% to $0.325 per share. The dividend is payable October 9, 2017 to stockholders of record on August 29, 2017, with an ex-dividend date of August 25, 2017. The yield based on the new payout is 2.2%.

First American Financial Corporation (FAF) is engaged in the business of providing financial services. Recently the company increased its quarterly dividend 12% to $0.38 per share. The dividend is payable September 15, 2017 to stockholders of record on September 8, 2017, with an ex-dividend date of September 7, 2017. The yield based on the new payout is 3.1%.

Digirad Corporation (DRAD) provides healthcare solutions. Recently the company increased its quarterly dividend 10% to $0.055 per share. The dividend is payable August 30, 2017 to stockholders of record on August 18, 2017, with an ex-dividend date of August 16, 2017. The yield based on the new payout is 5.9%.

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 the aforementioned securities. See a list of all my Dividend Growth Portfolio holdings here.

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(Photo Credit)


Tags: KSU, DDS, RMD, PF, FAF, DRAD,

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