This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Four Income-Producing Dividend Stocks

By Kevin Grewal, editorial director at

NEW YORK ( TheStreet) -- At a time when many investors have been fleeing to safe-haven assets and enhanced uncertainty in the health of the global economy continues to prevail, dividend-rich companies remain an attractive choice to add a steady source of income.

As compared to last year, dividends and share buybacks in corporate America are making their return after both slumped last year as companies hoarded cash and were unsure of the health of the world's financial system. In 2010, 135 companies have raised their dividends and some major players include equipment maker Caterpillar (CAT - Get Report) and retailers Target (TGT - Get Report) and American Eagle (AEO - Get Report).

In general, raising dividends illustrates that a company is in good financial shape and is well positioned for future growth. As for Caterpillar, the company's earnings have been improving due to upbeat comments about the U.S. economy from Fed Chairman Ben Bernanke as well as favorable Chinese export data indicating global economic recovery and increased demand for Caterpillar's goods.

The story behind retailers Target and American Eagle are a bit different. Target recently announced a 47% increase in its dividends and American Eagle announced a 10% increase in its quarterly dividend, reflecting the strong cash generation of both companies. As for the future, Target plans to stall store expansions and use some of its cash to focus on marketing its higher-margin products. American Eagle's future is highly dependent on discretionary consumer spending trends, however, its excess cash enables it to have a healthy balance sheet.

Another notable mention in the dividend arena comes from media giant Viacom (VIA.B) as it announced its first-ever quarterly dividend of 0.15 per share. This decision to issue a dividend illustrates the health of the company, which has gained more than 15% year-to-date despite weak revenue generation from its subsidiaries.

Although these companies offer a great source of income through dividends, when investing in them, it is equally important to watch declines in value, as these declines can potentially eat away at enhanced returns generated by dividends.

To help protect against this equity depreciation, the use of an exit strategy, which identifies specific price points at which downward price pressures are likely to be seen, is important.

According to the latest data at, these price points are as follows: CAT at $60.83; TGT at $50.33; AEO at $12.01; VIA-B at $32.76. These price points change on a daily basis and are reflective of market volatility and conditions.

Written by Kevin Grewal in Houston, Tx

Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
VIA.B $0.00 0.00%
AEO $16.19 0.00%
CAT $71.30 0.00%
TGT $78.88 0.00%
AAPL $112.12 0.00%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs