Last week, there were more than half a dozen dividend reductions or eliminations from companies across various industries, including retail, tech, shipping, oil, real estate, finance and insurance.
Jim Cramer has advised investors in these difficult economic times to focus on dividend-paying stocks, telling "Mad Money" viewers in October that buying "non-dividend-paying stocks is just a leap of faith."
Fortunately, there were plenty of companies doing well to increase their dividends last week, too. Stockpickr has reviewed these companies and compiled a portfolio of the top dividend-increasers.
Provo, Utah-based distributor of personal care products and nutritional supplements Nu Skin Enterprises (NUS) enhanced its dividend by 5% to 11.5 cents per share on a quarterly basis, giving the stock a great CD-beating yield of 4.7%. Nu Skin also reported its earnings last week. The company, with a P/E ratio of 12, announced that its fourth-quarter earnings per share of 35 cents beat analysts' estimates of 26 cents per share. The stock has total debt of $185 million, but it has almost as much cash, with $101 million in the bank. Its operating cash flow is $81 million.
Nu Skin is owned by Royce, an investment management company that utilizes a disciplined value approach to invest in smaller-cap stocks. It also owns Lincoln Electric Holdings (LECO), with a yield of 2.5%; AllianceBernstein (AB), with a yield of 6.9%; and Simpson Manufacturing (SSD), with a 1.9% yield.
Cosmetics, perfume and skincare company Avon Products (AVP) gave its quarterly dividend a makeover last week, bumping it up by 5%, from 20 cents to 21 cents a share, which gives the company beefy yield of 3.7%. This network marketing company also showed an 80% increase in net income for the fourth quarter due to lower expenses. However, its earnings of 54 cents per share were lower than analysts' expectations of 59 cents per share. Its operating income increased by 66% to $372 million. As for its balance sheet, although it has $2.5 billion in debt, it is $1.1billion in cash.
Washington, D.C.-based hedge fund Edgemoor Capital is an owner of Avon. The investment company chooses stocks using a value-oriented approach that looks for, among other things, a low price-to-earnings ratio, a low price-to-book value and excellent growth prospects. Edemoor also holds Devon Energy(DVN), with a 1.1% yield; United Parcel Service (UPS), with a 3.8% yield; and Warren Buffett's Berkshire Hathaway (BRK.B), which doesn't pay a dividend.
For more ideas, check out the top dividend-increasers portfolio, which includes one stock that raised its dividend by 17%, on Stockpickr.
Posted on Feb. 9, 2009
