Below are several companies that have recently increased their cash dividends to shareholders:

Alliant Energy (LNT) provides electric and natural gas utility services, and also has various unregulated energy, freight transportation, and other investments. January 14th the company increased its quarterly dividend 13% to $0.45/share. The dividend is payable on February 15, 2011, to share owners of record on close of business January 31, 2011. The ex-dividend date is January 27, 2011. The yield based on the new payout is 4.6%.

Core Labs (CLB) is a Netherlands-based company that provides reservoir description, production enhancement, and reservoir management services to the oil and gas industry worldwide. January 14th the company raised its quarterly dividend to $0.25/share. The dividend is payable on Feb. 25 to shareholders of record on Jan. 25. The ex-dividend date is Jan. 21. The yield based on the new payout is 1.2%.

Calumet Specialty Products (CLMT) is an independent U.S. refiner and marketer operates refineries in Louisiana and facilities in Pennsylvania and Texas, and distributes product throughout North America. January 14th the partnership increased its quarterly distribution 2.2% to $0.47/unit. The distribution will be payable on February 14, 2011 to holders of record of such units at the close of business on February 4, 2011. The ex-distribution date is February 2, 2011. The yield based on the new payout is 7.8%.

Enterprise Products (EPD) is an integrated provider of natural gas and natural gas liquids services, including processing, fractionation, storage, transportation, and terminalling. January 14th the partnership raised its quarterly distribution 1.3% to $0.59/unit. The distribution will be paid on Monday, February 7, 2011, to unitholders of record as of the close of business on Monday, January 31, 2011. The ex-distribution date is January 27, 2011. EPD is a Dividend Achiever and has raised its dividend for 14 consecutive years. The yield based on the new payout is 5.5%.

Standard Motor (SMP) manufactures and distributes replacement parts for the automotive aftermarket. January 18ththe company increased its quarterly dividend 40% to $0.07/share. The dividend is payable on March 1, 2011 to stockholders of record on February 15, 2011. The ex-dividend date is February 11, 2011. The yield based on the new payout is 2.3%.

Crestwood Midstream (CMLP) is involved in gathering and processing natural gas and natural gas liquids. January 18th the partnership increases its quarterly distribution 2.3% to $0.43/unit. This distribution will be paid on February 11, 2011, to unitholders of record on February 1, 2011. The ex-distribution date is January 28, 2011. The yield based on the new payout is 6.1%.

Bar Harbor Bankshares (BHB) offers a range of deposit, loan, and related banking products, as well as brokerage services. January 18th the company raised its quarterly dividend 1.9%. The quarterly cash dividend is payable to all shareholders of record as of the close of business February 16, 2011 and will be paid on March 15, 2011. The yield based on the new payout is 3.6%.

Enterprise Bancorp (EBTC) owns Enterprise Bank and Trust Company, which provides various banking products and services in Massachusetts and New Hampshire. January 18th the company raised its quarterly dividend 5% to $0.105/share. The dividend is payable March 1, 2011 to shareholders of record as of February 8, 2011. The ex-dividend date is February 4, 2011. The yield based on the new payout is 3.0%.

Linear Technology (LLTC) manufactures high-performance linear integrated circuits. January 18th the company increased its quarterly dividend 5.5% to $0.24/share. The dividend is payable March 2, 2011 to stockholders of record on February 18, 2011. The ex-dividend date is February 16, 2011. LLTC is a Dividend Achiever and has raised its dividend for 19 consecutive years. The yield based on the new payout is 2.7%.

Global Partners (GLP) engages in the wholesale and commercial distribution of refined petroleum products and provides ancillary services in the U.S. and internationally. January 19th the partnership raised its quarterly distribution 1% to $0.50/share. The distribution will be paid February 14, 2011 to unitholders of record as of the close of business February 3, 2011. The ex-distribution date is February 1, 2011. The yield based on the new payout is 7.2%.

McGraw-Hill (MHP) is a leading information services organization serves worldwide markets in education, business, industry, other professions and government. January 19th the company increased its quarterly dividend 6.4% to $0.25/share. The dividend will be payable on March 10, 2011, to shareholders of record on February 24, 2011. The ex-dividend date is February 22, 2011. MHP is a Dividend Aristocrat and has raised its dividend for 38 consecutive years. The yield based on the new payout is 2.5%.

Kinder Morgan (KMP) is one of the largest pipeline master limited partnerships (MLPs) in the U.S. January 19th the partnership increased its quarterly distribution 1.8% to $1.13/unit. The distribution is payable on February 14, 2011, to unitholders of record as of January 31, 2011. The ex-distribution date is January 27, 2011. KMP is a Dividend Achiever and has raised its distribution for 15 consecutive years. The yield based on the new payout is 6.3%.

ONEOK (OKE) is an Oklahoma-based integrated natural gas company also has an energy marketing and trading business. January 19th the company raised its quarterly dividend 8% to $0.52/share. The dividend is payable February 14, 2011, to shareholders of record at the close of business January 31, 2011. The ex-dividend date is January 27, 2011. The yield based on the new payout is 3.6%.

Western Gas (WES) engages in the business of gathering, compressing, treating and transporting natural gas. January 19th the partnership raised its quarterly distribution 2.7% to $0.38/unit. The distribution is payable on February 11, 2011 to unitholders of record at the close of business on February 1, 2011. The ex-distribution date is January 28, 2011. The yield based on the new payout is 4.9%.

ALLETE (ALE) mainly provides electric service in northeastern Minnesota and northwestern Wisconsin. January 20th the company increased its quarterly dividend 1.1% to $0.445/share. The quarterly dividend is payable March 1 to common shareholders of record at the close of business on February 15, 2011. The ex-dividend date is February 11, 2011. The yield based on the new payout is 4.8%.

Mac-Gray (TUC) operates as a laundry facilities management contractor in the U.S. January 20th the company raised its quarterly dividend 10% to $0.055/share. The dividend is payable on April 1, 2011, to stockholders of record at the close of business on March 15, 2011. The ex-dividend date is March 11, 2011. The yield based on the new payout is 1.4%.

Finish Line (FINL) is a mall-based specialty retailers in United States. January 20th the company increased its quarterly dividend 25% to $0.05/share. The quarterly cash dividend will be payable March 14, 2011 to shareholders of record as of February 25, 2011. The ex-dividend date is February 21, 2011. The yield based on the new payout is 1.2%.

Washington Post (WPO) publishes The Washington Post newspaper, operates TV stations and cable systems, and provides education and database services. January 20th the company raised its quarterly dividend 4.4% to $2.35/share. The The dividend is payable on February 11, 2011, to shareholders of record on January 31, 2011. The ex-dividend date is January 27, 2011. The yield based on the new payout is 2.1%.

Family Dollar (FDO) operates a chain of over 6,800 retail discount stores in 44 states across the U.S. January 20th the company increased its quarterly dividend 16% to $0.18/share. The dividend is payable Friday, April 15, 2011, to shareholders of record at the close of business on Tuesday, March 15, 2011. The ex-dividend date is March 11, 2011. FDO is a Dividend Aristocrat and has raised its dividend for 35 consecutive years. The yield based on the new payout is 1.6%.

StoneMor (STON) operates 235 cemeteries in 24 states and Puerto Rico (as of December 31, 2009). January 20th the partnership raised its quarterly distribution 1.8% to $0.575/unit. The distribution is payable on February 14, 2011, to common and subordinated unit holders of record as of the close of business on January 31, 2011. The ex-distribution date is January 27, 2011. The yield based on the new payout is 7.5%.

1st Source Corporation (SRCE) owns 1st Source Bank and First National Bank, Valparaiso that offer commercial and consumer banking services to clients in Indiana and Michigan. January 20th the company increased its quarterly dividend 6.7% to $0.16/share. The cash dividend is payable on February 15, 2011 to shareholders of record on February 4, 2011. The yield based on the new payout is 3.5%.

Polaris Industries (PII) designs, engineers, and manufactures all terrain vehicles, snowmobiles, and motorcycles. January 20th the company raised its quarterly dividend 13% to $0.45/share. The dividend is payable on February 15, 2011 to shareholders of record at the close of business on February 1, 2011. The ex-dividend date is January 28, 2011. PII is a Dividend Achiever and has raised its dividend for 16 consecutive years. The yield based on the new payout is 2.5%.

Centerpoint Energy (CNP) is one of the largest electric and natural gas delivery companies in the U.S. January 20th the company increased its quarterly dividend to $0.1975/share. The dividend is payable on March 10 to shareholders of record on Feb. 16. The ex-dividend date is Feb. 14. The yield based on the new payout is 4.96%.

ONEOK (OKS) is a leading transporter of natural gas and natural gas liquids (NGLs) in the Mid-Continent area to market centers in the U.S. January 20th the partnership raised its quarterly distribution to $1.14/unit. The distribution is payable February 14, 2011, to unitholders of record as of January 31, 2011. The ex-dividend date is January 27, 2011. The yield based on the new payout is 5.7%.

Pall Corp. (PLL) is a leading producer of filters for the health care, aerospace, microelectronics and other industries.
January 20th the company increased its quarterly dividend 9.4% to $0.175/share. The dividend is payable on February 23, 2011 to shareholders of record as of February 8, 2011. The ex-dividend date is February 4, 2011. The yield based on the new payout is 1.4%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

Related Posts
- Increasing Dividend Yield Part III: Preferred Stock
- Five Stocks With A Low Dividend Payout Ratio
- Nucor Corp. (NUE): Forging A Different Path
- 10 Best U.S. Dividend Stocks
- Is It Time To Sell Long-Bonds?

(Photo Credit)

Often when I write about a stock that is yielding 2%, 3% or even 4%, I get a question that goes something like, “Why would you buy that stock when there are better options like ‘Amalgamated Risk?’ Its currently yielding 7%, 8%, 9% or more?” With this statement the reader has possibly identified themselves as an income investor, and but definitely established the fact that they are not a dividend growth investor.

Tracking Yield On Cost

Yield-on-cost (YOC) is simply Current Annual Dividend dividend by Original Cost Per Share. YOC not a substitute for calculating an internal rate of return (IRR). The IRR calculation takes into account both capital appreciation and the timing of cash flows (purchases, sells and dividends). However, as a dividend growth investor, my primary focus is on dividend growth and since my desired holding period is forever, capital appreciation is little more than an interesting side note. YOC is much better suited for tracking dividend growth since it is individually tied to a stock and takes into account all the variations of growth rates over time, along with the timing of purchases. Also, it is useful when trying to explain to our income investor brethren why we chose the stock yielding 3% over ‘Amalgamated Risk’ at 8%.

Recently, I modified my D4L-Data model to include projections of YOC after 5, 10, 15 and 20 years. These projections are derived by growing the current yield using the dividend growth rate. As for the dividend growth rate, I use the minimum of the 1, 3, 5, 7 or 10 year compound annual growth rates; or 15% if in every consecutive 4-year period dividends grew on average in excess of 15%.

20 Dividend Stocks With A 20% Yield In 20 Years

Sorting the stocks in my D4L-Data model by their 20 Year YOC and throwing out some bad apples, we are left with these 20 stocks that are projected to have a 20% YOC in 20 years:

Lowe’s Companies (LOW) | Analysis
- Current Yield: 1.29%
- Dividend Growth: 15.0%
- 20 Year YOC: 21.12%

McGrath RentCorp (MGRC) | Analysis
- Current Yield: 3.32%
- Dividend Growth: 10.26%
- 20 Year YOC: 23.40%

Fastenal Company (FAST)
- Current Yield: 1.46%
- Dividend Growth: 15.00%
- 20 Year YOC: 23.94%

Colgate-Palmolive (CL) | Analysis
- Current Yield: 2.41%
- Dividend Growth: 12.48%
- 20 Year YOC: 25.34%

C.H. Robinson (CHRW)
- Current Yield: 1.61%
- Dividend Growth: 15.00%
- 20 Year YOC: 26.32%

Canadian National (CNI)
- Current Yield: 1.75%
- Dividend Growth: 15.00%
- 20 Year YOC: 28.69%

Walgreen Company (WAG) | Analysis
– Current Yield: 1.57%
- Dividend Growth: 15.72%
- 20 Year YOC: 29.14%

Raven Industries (RAVN) | Analysis
- Current Yield: 1.81%
- Dividend Growth: 15.00%
- 20 Year YOC: 29.65%

Eaton Vance (EV)
- Current Yield: 1.82%
- Dividend Growth: 15.00%
- 20 Year YOC: 29.72%

HCC Insurance (HCC)
- Current Yield: 1.91%
- Dividend Growth: 15.00%
- 20 Year YOC: 31.30%

Becton, Dickinson (BDX) | Analysis
- Current Yield: 1.94%
- Dividend Growth: 15.00%
- 20 Year YOC: 31.72%

IBM (IBM)
- Current Yield: 1.94%
- Dividend Growth: 15.00%
- 20 Year YOC: 31.72%

United Technologies Corp. (UTX) | Analysis
- Current Yield: 2.05%
- Dividend Growth: 15.00%
- 20 Year YOC: 33.63%

Praxair, Inc. (PX)
- Current Yield: 2.15%
- Dividend Growth: 15.00%
- 20 Year YOC: 35.17%

Owens & Minor (OMI)
- Current Yield: 2.25%
- Dividend Growth: 15.12%
- 20 Year YOC: 37.55%

Linear Technology (LLTC)
- Current Yield: 2.93%
- Dividend Growth: 15.00%
- 20 Year YOC: 47.94%

McDonald’s Corp. (MCD) | Analysis
- Current Yield: 3.12%
- Dividend Growth: 15.00%
- 20 Year YOC: 51.01%

Nucor Corporation (NUE) | Analysis
- Current Yield: 3.18%
- Dividend Growth: 15.00%
- 20 Year YOC: 52.00%

Cardinal Health, Inc. (CAH) | Analysis
- Current Yield: 2.02%
- Dividend Growth: 17.65%
- 20 Year YOC: 52.06%

Meridian Bioscien (VIVO) | Analysis
- Current Yield: 3.40%
- Dividend Growth: 15.00%
- 20 Year YOC: 55.67%

One key component of current yield is risk. If Treasuries (risk free) were paying 7%, 8% or 9%, many income investors and a significant number of dividend growth investors would divert a portion of their portfolios to them.

You will note that all the above stocks are yielding well under 4%. It is also important to note that I do not believe that all the above stocks will achieve their 20 year YOC. In much the same way high-yielding stocks often end up cutting their dividends, many of the above stocks will end up cutting their dividend growth rate. Put another way, there is risk associated low-yield high-dividend-growth stocks. However, for the high dividend growth stocks that perform well over the next 20 years, the rewards are potentially much higher than those of a high-yield, low growth stock.

Full Disclosure: Long CNI, UTX, MCD, NUE. See a list of all my income holdings here.

(Photo Credit)

As for my portfolio, I consider asset allocation only when looking at my holdings in total. It would be much too difficult to maintain a good allocation within individual portfolios (income, growth, 401(k), Roth IRA, etc.), while trying to maintain my overall allocation. However, an investor could build a degree of allocation into a portfolio of dividend income securities. Consider the following:

Business Services Sector

• Automatic Data Processing Inc. (ADP)
  Yield: 3.33% | Style: Large Growth | Analysis
• C H Robinson Worldwide Inc. (CHRW)
  Yield: 1.86% | Style: Large Growth
• Expeditors International of Washington Inc. (EXPD)
  Yield: 1.16% | Style: Mid Growth

Consumer Goods Sector

• Clorox Company (CLX)
  Yield: 3.23% | Style: Mid Core
• Coca-Cola Company (KO)
  Yield: 3.04% | Style: Large Growth | Analysis
• Procter & Gamble Company (PG)
  Yield: 2.85% | Style: Large Core | Analysis

Consumer Services Sector

• Genuine Parts Company (GPC)
  Yield: 4.19% | Style: Mid Value | Analysis
• Sysco Corporation (SYY)
  Yield: 3.56% | Style: Large Core | Analysis
• McDonald’s Corporation (MCD)
  Yield: 3.22% | Style: Large Core | Analysis

Energy Sector

• BP Plc ADR (BP)
  Yield: 6.15% | Style: Large Value
• Chevron Corporation (CVX)
  Yield: 3.75% | Style: Large Value
• ExxonMobil Corporation (XOM)
  Yield: 2.56% | Style: Large Value

Financial Services Sector

• Harleysville Group Inc. (HGIC)
  Yield: 3.90% | Style: Small Value | Analysis
• Chubb Corporation (CB)
  Yield: 2.85% | Style: Large Value | Analysis
• Aflac Inc. (AFL)
  Yield: 2.38% | Style: Large Core | Analysis

Hardware Sector

• Diebold Incorporated (DBD)
  Yield: 3.67% | Style: Small Value
• Linear Technology (LLTC)
  Yield: 3.23% | Style: Mid Core
• Raven Industries Inc. (RAVN)
  Yield: 1.90% | Style: Small Growth | Analysis

Health Care Sector

• Meridian Bioscience Inc. (VIVO)
  Yield: 3.27% | Style: Small Growth
• Johnson & Johnson (JNJ)
  Yield: 3.08% | Style: Large Core | Analysis
• Cardinal Health Inc. (CAH)
  Yield: 2.10% | Style: Large Core | Analysis

Industrial Materials Sector

• Nucor Corp. (NUE)
  Yield: 3.40% | Style: Large Core | Analysis
• Emerson Electric Co. (EMR)
  Yield: 2.90% | Style: Large Core | Analysis
• 3M Company (MMM)
  Yield: 2.58% | Style: Large Core

Media Sector

• McGraw-Hill Companies Inc. (MHP)
  Yield: 2.63% | Style: Large Core

Pharmaceuticals Sector

• Eli Lilly & Company (LLY)
  Yield: 5.77% | Style: Large Value
• Abbott Laboratories (ABT)
  Yield: 2.97% | Style: Large Growth | Analysis

Real Estate Sector

• Essex Property Trust (ESS)
  Yield: 5.14% | Style: Mid Core
• Corporate Office Properties Trust Inc. (OFC)
  Yield: 4.29% | Style: Mid Core
• Federal Realty Investment Trust (FRT)
  Yield: 4.06% | Style: Mid Core

Telecommunications Sector

• CenturyLink Inc. (CTL)
  Yield: 8.10% | Style: Large Value
• AT&T Inc. (T)
  Yield: 6.54% | Style: Large Value | Analysis

Utilities Sector

• Integrys Energy Group Inc. (TEG)
  Yield: 6.61% | Style: Mid Value
• Consolidated Edison Company (ED)
  Yield: 5.59% | Style: Large Value
• MGE Energy Inc. (MGEE)
  Yield: 4.45% | Style: Small Core

Bonds

• Vanguard Short-Term Bond ETF (BSV)
  Yield: 2.74% | Style: Short-Term Bond
• Vanguard Intermediate-Term Bond ETF (BIV)
  Yield: 4.32% | Style: Intermediate-Term Bond
• Vanguard Long-Term Bond ETF (BLV)
  Yield: 5.16% | Style: Long-Term Bond

Needless to say, the above will not provide a perfect allocation, but it goes a long way to provide diversity in a portfolio focused only on income securities. In my personal portfolio, I buy the best available dividend securities and use my other investments to balance my asset allocation.

Full Disclosure: Long ABT, ADP, AFL, BIV, BLV, BP, CLX, CTL, CVX, ED, EMR, GPC, HGIC, JNJ, KO, LLY, MCD, MMM, NUE, PG, SYY, T, TEG. See a list of all my income holdings here.

(Photo Credit)

Below are several select companies that recently decided to reward their shareholders with fruits of their labor in the form of increased cash dividends:

Epoch Holding (EPHC) is an investment advisory and investment management services company. January 11th the company increased its quarterly dividend 67% to $0.05/share. The dividend is payable on February 12, 2010 to shareholders of record as of January 29, 2010. The ex-dividend date is January 27, 2010. The yield based on the new payout is 1.84%.

CVS Caremark (CVS) is a leading operator of both retail drug stores and pharmacy benefit management services in the U.S. January 12th the company raised its quarterly dividend 15% to $0.0875/share. The dividend is payable February 2, 2010 to holders of record on January 22, 2010. The yield based on the new payout is 1.03%.

Duncan Energy Partners (DEP) gathers, transports, markets, and stores natural gas, as well as in transporting and storing natural gas liquids (NGLs) and petrochemicals in the U.S. January 12th the company raised its quarterly distribution 4.1% to $0.445/unit. The cash distribution will be paid Friday, February 5, 2010, to unitholders of record at the close of business on Friday, January 29, 2010. The ex-dividend date is January 27, 2010. This distribution is the fifth consecutive quarterly distribution increase. The yield based on the new payout is 7.35%.

Linear Technology (LLTC) manufactures high-performance linear integrated circuits. January 12th the company boosted its quarterly dividend to $0.23/share. The dividend will be paid on February 24, 2010 to stockholders of record on February 12, 2010. LLTC is a Dividend Achiever and has raised its dividend for 17 consecutive years. The yield based on the new payout is 3.08%.

Fifth Street (FSC) is a specialty finance company that lends to and invests in small and mid-sized companies. January 13th the company increased its quarterly dividend 11% to $0.30/share. The dividend is payable on March 30 to shareholders as of the close on March 3. The yield based on the new payout is 10.15%.

Shaw Communications (SJR) is a Canadian communications company that provides broadband cable television, Internet and satellite direct-to-home services to apx. 3.4 million customers. January 14th the company boosted its dividend 5% to $0.8775/share. Shaw’s dividends are declared and paid on a monthly basis and this increase will commence March 30, 2010. The yield based on the new payout is 4.37%.

While a mango tree gives fruit for several generations, a great dividend stock will give increasing dividends each year. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

(Photo Credit)

Monday, Citigroup (C) issued some cautious comments on BAC and said investors should be braced for a very challenging 4Q. C cut Q4 EPS estimates, expects another dividend cut and expects the company raise fresh capital, but will wait for a better environment. Ultimately, C sees cumulative credit losses of $165 billion for 2008-2011, with only about 33% recognized so far.

Yesterday it was reported that BAC needs more aid from the government for its Merrill Lynch acquisition. To date, BAC has received $25 billion from the Treasury Department’s Troubled Assets Relief Program (TARP). According to the The Wall Street Journal, BAC needs additional assistance to deal with an ugly quarterly report from Merrill. By mid-day Thursday shares were down 20% to around $8.

Not all news was bad this week. Instead of looking for a government handout, several companies continue to increase the cash given to their shareholders through higher dividends. Here are a few:

• Robbins & Myers (RBN) Increases Dividend to $0.04/share (Yield 0.96%)
• CVS Caremark (CVS) Boosts Qtr. Dividend 10.5% to $0.0725 (Yield 1.1%)
• Cintas (CTAS) Boosts Annual Dividend to $0.47 (Yield 2.02%)
• Linear Technology (LLTC) Boosts Qtr. Dividend to $0.22/share (Yield 3.98%)
• Monsanto (MON) Boosts Qtr Dividend 10% to $0.265 (Yield 1.38%)
• Pentair (PNR) Boosts Qtr. Dividend from $0.17 to $0.18 (Yield 2.97%)
• Shaw Communications (SJR) Raises Annual Dividend to $0.053 (Yield 3.80%)
• Family Dollar (FDO) Raises Qtr. Dividend by 8% to $0.135/share, (Yield 1.89%)

When BAC cut its dividend it no longer met the criteria for inclusion in my income portfolio. There is a reason that my most basic investing rule is to immediately sell a stock after it cuts its dividend; I BAC sold at $28.51/share after its first dividend cut.

Disclosure: No position in the aforementioned securities.

(Photo: Steve Woods)