Just the fear that a company won't raise its dividend is enough to cause a stock to drop. Look at what happened to Allstate (ALL) last week. The homeowners and automobile insurance company had its biggest drop in the last three months after the company stated that, due to its latest quarterly loss, it might end its 14-year track record of raising its dividend.

Fortunately, more than a dozen companies were doing well enough to bump up their dividend last week. Stockpickr has reviewed the list of dividend declarations and compiled a portfolio of the top dividend-increasers for the week.

One of the dividend boosters was TransAlta (TAC), the electric utility, which generates power from coal, gas, hydro, wind and geothermal, distributing in Canada, the U.S., Australia and Mexico. The company elevated its dividend by 7.4%, from 27 cents to 29 cents a quarter, generating a yield of 4.8%. The dividend is payable on April 1 to shareowners of record on March 1.

The company just reported record cash flow and an earnings-per-share increase of 11%. It also got its Kent Hills Wind Farm up and running on time and on budget, which will provide 280,000 megawatt hours per year, enough for more than 17,000 homes. Its P/E ratio is 17, which unfortunately is a bit high compared with the average P/E of 13 of the other electric utilities. It has more than $2.4 billion in debt and only $53 million in cash. It pays out about $230 million in dividends, which is covered by its operating cash flow of $646 million.

TransAlta is owned by The Children's Investment Fund, an activist hedge fund based in London, which donates a significant portion of its fees earned to a charitable trust. It was founded in January of 2004 by Christopher Hohn. The fund also owns railroad stocks Union Pacific (UNP), which yields 2.5%, and CSX (CSX), yielding 3%, as well as credit card company MasterCard (MA), yielding 0.4%.

Praxair (PX) also hiked its quarterly dividend, by 6.7%, from 37.5 cents to 40 cents a share, giving it a yield of 2.6%. The industrial gas distributor reported better-than-expected quarterly earnings, at $1.01 a share excluding a charge, vs. analysts' expectations of 96 cents per share. The stock has a P/E ratio of 15, the same as its nearest competitor Air Products & Chemicals (APD). Praxair has $4.17 billion in debt and cash of $118 million. The operating cash flow is $1.51 billion, well covering its dividend payout.

Praxair is part of the portfolio of Navellier & Associates, a $3.4 billion fund managed by Louis Navellier since 1980. Navellier also holds Wal-Mart Stores (WMT), with a yield of 2%,;General Mills (GIS), with a 2.9% yield; and Colgate-Palmolive (CL), with a 2.5% yield.

For more ideas, check out Stockpickr's top dividend-increasers for the week portfolio, which includes one company that raised its dividend by more than 50%.

Posted on Feb. 2, 2009

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