Dividend Stocks for the Week
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By Jonas Elmerraji
BALTIMORE (
) -- While blue chip companies have been largely absent from the dividend hikes of the past, with the exception of
Philip Morris
(PM) - Get Report
two weeks ago, several blue chips made a comeback this past week, announcing that they were increasing shareholder payouts in the coming months.
Those announcements came as news percolated that we may indeed be through with the recession that's gripped the world economy officially since December 2007.
And with more economic news on the way today, in the form of updated Case-Shiller Home Price Index and Consumer Confidence numbers, and even more economic metrics updated throughout the rest of the week, there should be plenty of opportunities for stocks to move in the coming trading sessions.
Regardless of your economic prognosis right now, it's worthwhile to give dividend-increasers a second look. Increasing a dividend is a big deal for any company, but it's a particularly significant event in the midst of a recession. Historically, companies that pay dividends materially outperform those that don't, and when the market turns bearish, dividends could be the only semblance of return that investors see for a while.
That's why every week Stockpickr reviews recent dividend declarations and compiles a portfolio of
. These stocks represent some of the most enticing investments on the market right now.
McDonald's
(MCD) - Get Report
may have a clown for a spokesman, but management is another story. The stock was one of the very few that actually managed to deliver gains for investors in 2008, climbing 4.2% in the midst of the worst stock crash in recent history. And now, with a 3.5% dividend yield tacked on, the world's biggest fast food company is even more attractive than before.
Much of the company's success over the last year has been thanks to strong financial performance as consumers eschew expensive eating options in favor of fast food. McDonald's has capitalized on that trend by offering incredibly cheap food alongside premium choices, such as the company's new Angus Third Pounder line.
Among the funds that own shares of the golden arches is the
(FCNTX), which holds Morningstar's coveted five-star rating. Other holdings in this fund's portfolio include
Coca-Cola
(KO) - Get Report
, with a dividend yield of 3.09%, and
Walt Disney Company
(DIS) - Get Report
, with a 1.24% dividend yield.
Another big name that announced a dividend hike last week was defense contractor
Lockheed Martin
(LMT) - Get Report
. The company raised its dividend 10.5% to 63 cents per share for shareholders of record on Dec. 1. The increase comes as the federal defense budget tightens, leaving the world's biggest defense contractor looking less attractive to investors. But with plans to commercialize the company's depth of expertise, a dividend hike could just be the first reminder that this stock is going places.
Institutional investors continue to place their bets on Lockheed, including the
, which invests in "sin stocks." Other stocks the fund holds include
Diageo
(DEO) - Get Report
, with a yield of 4.68%, and
Reynolds American
(RAI)
, with a yield of 7.53%.
With several more increasers, there are plenty of dividend plays to take a look at this week. For the rest of this week's dividend stocks, check out the
portfolioon Stockpickr. 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, Elmerraji had no positions in stocks mentioned.
Jonas Elmerraji based out of Baltimore, 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.
