Friday, December 19, 2008

* Big Names, Big Dividend Increases

Compound interest is what occurs when interest previously earned is added to the principle and is considered when calculating future interest - i.e. earning interest on interest. So, what's more powerful than compound interest? Compound dividends! Compound dividends are like compound interest on steroids - you are not only earning on reinvested dividends, but the dividend rate is increasing.

Here are several big-name companies compounding their dividends by raising their cash distributions to shareholders:
  • Honeywell (HON) Boosts Qtr. Dividend 10% to $1.21/Share (3.50%)
  • AT&T (T) Raises Qtr. Dividend by 2.5% to $0.41/Share (6.05%)
  • Waste Management (WMI) to Increase Qtr. Dividend by 7.4% to $0.29/Share (3.48%)
  • Boeing (BA) Raises Qtr. Dividend by 5% to $0.42/Share (4.21%)
  • Eli Lilly (LLY) Increase Qtr. Dividend from $0.47 to $0.49 (5.45%)
  • ITT (ITT) Management To Recommend 22% Dividend Increase (1.58%)
  • BB&T (BBT) Boosts Qtr. Dividend 2.2% to $0.47/Share (6.58%)
LLY was reviewed on 7/7/2008. However, I currently rate it as a 5 Star-Strong Buy. BBT was reviewed on 6/23/2008 with a 4-Star Buy rating.

After running the remaining companies through my D4L-PreScreen.xls model, the Dividend Achiever T with a NPV of MMA Differential of $8,911 is one that I have on my watch list. WMI with a

NPV of MMA Differential of $5,991, BA with a NPV of MMA Differential of $18,730 and ITT with a NPV of MMA Differential of $17,946 are ones worthy of additional consideration. None of the other companies' NPV of MMA Differentials were close enough to warrant a more complete evaluation.

Disclosure: Long LLY, BBT.

Tags: [BA] [BBT] [HON] [ITT] [LLY] [T] [WMI]