BALTIMORE (Stockpickr) -- With interest rates scraping along record time lows right now, how much income is your portfolio paying out? If you answered "not enough," you need to rethink you income holdings. After all, a noticeable group of companies is practically shoveling cash to shareholders right now.
I realize that may sound surprising, especially as negative real yields crush fixed income investors in 2012. But dividends are looking impressive this year, even if price action isn't.
With corporate cash and earnings at all-time highs, companies are doing their part to return value to shareholders. Today, more
components pay a cash dividend than any time in the last two decades. And they're paying out more cash than ever before: Each hypothetical share of the index pays out more than $29 in cold hard cash at last count.
Dividends are also a big deal for investors in search of the biggest total returns: Over the last 36 years,
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.
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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
New Dividend: 53.5 cents quarterly (per share)
Dividend Percent Increase: 11.5%
Current Yield: 2.57%
First up is
, a $68 billion manufacturing conglomerate that announced an 11.5% dividend increase on Wednesday, ratcheting the firm's payout to 53.5 cents per quarter -- a 2.57% dividend yield at current price levels.
UTX owns a diverse portfolio of brands that ranges from Carrier air conditioners to Sikorsky helicopters, positioning that benefits the firm when capital spending is high. Despite cyclical headwinds, UTX has still managed to grow revenue in each of the last three years.
UTX's dividend hike wasn't a complete surprise -- it was one of the
. Still, the announcement is a welcome addition for shareholders who are looking for bigger income checks.
As of the most recently reported period, UTX was one of the
New Dividend: 52 cents quarterly (per share)
Dividend Percent Increase: 13%
Current Yield: 2.42%
weighs in as the biggest heavy equipment maker in the world, manufacturing the machines that help build infrastructure, move products and mine the earth. Caterpillar's heavy positioning in the construction business was a major headwind during the recession, but the industry is starting to heat back up now, especially as infrastructure demand in emerging markets ups the need for machinery and power systems.
Like UTX, stair-step revenue growth in the last three years has put the firm in a solid position for a dividend hike.
Also like UTX, Caterpillar's hike wasn't a big surprise. We looked at it as a potential increaser
, and the firm announced its 6-cent dividend increase on Wednesday.
New Dividend: 36 cents quarterly (per share)
Dividend Percent Increase: 20%
Current Yield: 2.47%
is having a solid year in 2012. Total returns year-to-date have come in at 14.6%, vastly outperforming the small increase in value that the S&P 500 has managed to eke out. And the firm is increasing shareholder returns even more thanks to a 20% dividend hike that brings its yield to 2.47%.
Target has been making some big changes in the last few years. The firm's entrance into the grocery business has the potential to dramatically impact the firm's operations, diluting net margins while improving top line and bottom line numbers on an absolute basis.
Again, here's a stock whose dividend hike I talked about
. Surprise or no, 6 cents is a solid payout increase for the retailer.
Target also shows up on a list of
New Dividend: 47 cents quarterly (per share)
Dividend Percent Increase: 10.6%
Current Yield: 2.73%
was another industrial name that I talked about
for its dividend-hiking potential. And sure enough, that potential got proven right last Friday (four days later) when the firm announced a 10.6% dividend increase.
Rockwell manufactures tools and controls used to increase efficiency at factories. Because Rockwell's focus is on reducing costs for customers, it has an easier sale than other firms that are trying to tack less cost-focused products onto factory floors. If Rockwell can justify the cost savings of its automation equipment, it should be able to continue to keep up its recent sales growth pace, especially in international markets.
National Fuel Gas
New Dividend: 36.5 cents quarterly (per share)
Dividend Percent Increase: 2.82%
Current Yield: 3.32%
Next up is
National Fuel Gas
, a mid-cap integrated natural gas company. Last Thursday, NFG announced a 2.82% increase to its quarterly dividend payout, bringing it to 36.5 cents per share. While the change in NFG's dividend was small, it piled a bigger payout onto what was already a respectable yield. With the change factored in, NFG yields 3.32% at current prices.
National Fuel Gas is a fully integrated nat gas company. That means that the firm explores for, produces, transports, and ultimately sells natural gas through its utility business in New York and Pennsylvania. Even though nat gas prices have been skipping across historic lows in the last few months, NFG's integrated operations help the firm collect solid net margins for their trouble.
If the substitution argument many nat gas watchers are making holds true (and energy consumers start substituting nat gas for pricier crude oil), profitability could climb considerably higher for NFG and peers.
New Dividend: 20 cents quarterly (per share)
Dividend Percent Increase: 5.3%
Current Yield: 0.76%
Medical device firm
is having a great year in 2012; shares of the $8.4 billion company have rallied more than 17% since the first trading day of January. Strictly speaking, Bard isn't a "dividend stock" it yields just 0.76%, putting it on the low end of the spectrum. But the sign management is sending by paying out more cash, coupled with awesome relative strength this year makes it worth taking a closer look at BCR nonetheless.
Close to 90% of BCR's sales come from consumable products, a source of recurring highly sticky revenues that generally have higher margins since customer acquisition costs eventually approach nil over the long-term. With shares breaking out above the psychologically important $100 mark, BCR looks in good shape to continue to run.
BCR was included in a list of the
Alexandria Real Estate Equities
New Dividend: 51 cents quarterly (per share)
Dividend Percent Increase: 4.1%
Current Yield: 2.89%
Lab space REIT
Alexandria Real Estate Equities
is another name that hiked its dividend payouts, increasing its quarterly dividend by 2 cents to 51 cents per share.
Many investors think of real estate investment trusts as ways to play the real estate market, but in reality, they're basically tailor-made to generate income. Most commercial REITs sport long-term triple-net leases that effectively take all of the insurance, tax, and maintenance costs off of the REIT and put them onto tenants. The result is a consistent, predictable income flow that isn't beholden to the ebb and flow of the real estate market.
I'm a big fan of niche REITs that focus on specific types of real estate -- as Alexandria does with lab space. Still, as welcome as ARE's dividend increase may be, this firm is one of the lower-yielding niche REITs out there. For a core income holding, I think there are better options out there.
To see these dividend plays in action, check out the
And if you haven't already done so,
today to create your own dividend portfolio.
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.