7 Dividend Stocks That Want to Pay You More Money
Typically, dividends and earnings season go hand in hand. That stands to reason -- after all, it's those corporate profits that are (ideally) fuelling a company's dividend payouts. And now, with corporate profits sitting at all-time highs, income investors are in a good position to get paid more cash in 2012.
While many investors still think of dividends as a tradeoff from capital gains, it's just not the case. Pure and simple, more cash payouts from dividends equal greater total returns on a historical basis.
Over the last 36 years, dividend stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.
That's why we pay close attention to the firms that are shoveling more corporate cash to shareholders. With that, here's a look at seven stocks that hiked payouts in the last couple of weeks .
You can't find a stock that fits the high-yield blue-chip mold much better than Procter & Gamble (PG) . The $183 billion consumer products maker owns some of the most well-defended brands on grocery store shelves, and also manages to yield 3.3%. That yield is a bit bigger now after last week's 7.05% dividend hike.
Procter's portfolio of brands include household names such as Tide, Pantene and Cover Girl, names that offer investors the combination of better customer stickiness and preferential treatment on store shelves. That combination makes P&G's business defensible, especially as the economy continues to show that it's growing. That being said, Procter's scale makes it tough for the firm to find meaningful growth here at home; it makes a lot of sense for the company to continue to focus on growing its already successful brands abroad.
Another source of profit growth is internal. The firm has been working on major cost reduction initiatives in the past few years, promising to grow margins by cutting down on the cost of goods sold. Even though P&G has an uphill battle right now coming from input costs, management should be able to achieve palpable margin expansion by trimming costs on other parts of the business.
With a hefty yield and an unblemished track record of returning cash to shareholders, P&G makes a solid core holding for investors.