It was a short trading week but an important one, marking the transition from the hideous stock market of 2008 to the optimistic new year of 2009.

In terms of dividends, there were still a few companies that raised theirs during the week. Stockpickr has reviewed the dividend declarations and compiled a portfolio of dividend-increasers.

One company to raise its dividend was American Financial Group (AFG), a Cincinnati-based property and casualty insurance company founded in 1872 that provides various types of insurance products. The company just increased its quarterly dividend by 4% to a 2.2% yield, from 12.5 cents a share to 13 cents a share.

An American Financial subsidiary, the Great American Insurance Group, is now offering green insurance coverage for new construction projects through its property and inland marine division. With a price-to-earnings ratio of 11, the stock trades at a premium to others in its industry, such as Travelers (TRV), which has a P/E ratio of 9. The stock also has an encouraging P/E-to-growth ratio of 0.5, far better than the property and casualty industry average of about 1.

American Financial is one of the more recent purchases of Hawkins Capital, a Houston-based hedge fund with more than $400 million under management. Hawkins also owns Diageo (DEO), the beer, wine and liquor company, which yields 5.5%; Coca-Cola (KO), with a 3.4% yield; and Johnson & Johnson (JNJ), with a yield of 3.1%.

Legg Mason Partners Financial Service Fund also owns American Financial. The fun, which is rated five stars by Morningstar and is managed by Amy LaGuardia, is ranked in the top 3% of all funds in its category of financial mutual funds for performance during the last five years. It also owns Assurant (AIZ), with a yield of 1.9%; Hanover Insurance Group (THG), with a yield of 1%; and JPMorgan Chase (JPM), with a 4.8% yield.

Another stock that boosted its dividend is Norwood Financial (NWFL), the holding company for Pennsylvania-based Wayne Bank. The company increased its dividend by 8% to 3.9%, or 27 cents a share, up from 25 cents a share. The dividend is payable on Feb. 2, 2009 to shareholders of record on Jan. 15, 2009. Norwood has a P/E ratio of 11, better than the industry average of 14 for regional Northeast banks. The stock is rated a buy by TheStreet.com.

For more ideas, check out the Dividend-Increasers for the Week Ending Jan. 2, 2009 portfolio at Stockpickr.com.

Posted on Jan. 5, 2009