BALTIMORE (Stockpickr) -- The past couple of weeks have given investors a relative drought for dividend increases, with only a couple of small companies declaring higher payouts to shareholders in early July. But things changed last week, thanks to earnings season.
In total, 18 companies announced that they were increasing dividends, hoping to attract income investors who've been sitting on the sidelines.
are a good place to be. Over the last 36 years, dividend stocks outperformed the rest of the
by 2.5% annually, and they outperformed nonpayers by nearly 8% each and every year, all while paying out cash to their shareholders, according to a study from NDR. And right now, companies that are willing to part with cash in arguably tough times are worth a second look.
Here's a look at
is a $7.2 billion construction supply company based in Minnesota.
Already, Fastenal shareholders have been having a good year thanks to the more-than-17% rally shares have seen year-to-date, but things are looking even better after management announced a 5% dividend increase last week. That dividend hike brings Fastenal's yield to an industry-besting 1.72%.
In the construction business, Fastenal's area of expertise is fasteners. But over the years, Fastenal has expanded its reach to other parts of the industrial maintenance and construction industry, selling everything from electrical components to janitorial supplies. With more than 2,300 stores spread throughout the country, Fastenal gives customers easy access to a bevy of Fastenal products -- and unlike most competitors, the company is incredibly adept at picking locations. Fastenal has only had to close 19 stores in its history.
The company's dividend should continue to flow into investors' hands thanks to thick margins, steady cash flows and a debt-free balance sheet. One fund that's hoping for continual increases is the
(BARAX), one of Fastenal's largest institutional owners. The funds also owns shares of
has been fighting to maintain its growth rate despite cutbacks from its customers in the automotive and heavy-duty truck industry.
While Cummins is a leader in diesel engines, natural gas and hybrid bus engines, and electric generators, the company's giant size in an incredibly cyclical industry has threatened to derail its progress from an especially rough 2009. Still, it looks like management sees a stronger market ahead. It announced a 50% dividend increase last week, bringing their payouts to shareholders to 26.25 cents per share.
Even though Cummins faces economic challenges in the near term, this firm is among the best-positioned in its industry to succeed. The company has a low cost structure, plenty of liquidity and nearly no debt. Those factors should ensure Cummins' ability to continue returning capital to shareholders, while also ensuring that the company maintains its position in the industry in future rough spots.
(CGMFX) is a major owner of the engine maker. Among the fund's other holdings are
More on Cummins
Charts of the Week
2010's been an especially tough year for retail pharmacy giant
The company has seen its shares tumble in 2010 since the beginning of January despite its best-in-breed status among drugstore chains. Still, management's doing what it can to deliver some returns to shareholders. Notably, the company increased its dividend 27.3% last week, bringing its yield up to 2.38%.
Increasing competition is causing trouble for Walgreen's stores, but little of that challenge is coming from other drugstores. The biggest risks right now come from mail-order pharmacies that offer superior pricing or relationships with insurance companies. But with stores within five miles of 70% of American households, convenience will continue to be a major factor in Walgreen's success. The company's Duane Reed acquisition should help fuel growth in the short term.
Among Walgreen's biggest investors is the
(CVAAX), which owns 47,000 shares of the company. Other fund holdings include
Walt Disney Company
For the rest of this week's dividend stocks, check out the
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-- 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.