In 2009, we took a weekly look at hundreds of companies that increased their dividend payouts to shareholders, signaling that the economy was rebounding.
After all, companies are loath to part with cash when their economic futures are uncertain. Now, in the final week of the year, most companies have had their chance to make dividend changes already, but that didn't stop four stocks from announcing theirs last week.
Why are we making such a big deal about dividends?
Dividend increases are significant for any company and an even bigger deal in this economy, where management has to decide whether to prioritize balance sheet liquidity or sharing profits with shareholders. And that's not all. 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 increases and compiles a portfolio of
. These stocks represent some of the most interesting investments on the market right now.
First up on this week's list is
The diversified communications company has exclusive rights to Apple's iPhone, one of the most profitable directory publishing businesses in the industry and an entrenched fixed-line segment. The company announced that it was increasing its dividend 2.4% last week to 42 cents per share.
AT&T has been in the national spotlight following a public tiff with top competitor Verizon through a series of TV ads, each suggesting that the other had an inferior 3G network. Ultimately, the two companies remain head and shoulders above their next biggest competitors,
, something that's significant to remember -- especially given the fact that AT&T's wholly owned Mobility division accounts for more than a third of sales.
One of the biggest institutional owners of AT&T is the
(PRFDX), managed by veteran Brian Rogers. The fund's other holdings include
is another company that hiked its payouts to shareholders last week.
It increased its dividend by 3.2% to 32 cents per share for a dividend yield of 5%.
Like many of its competitors, Bristol-Myers Squibb is threatened by patent losses in 2011, but with plenty of cash in the company coffers following the paring of noncore businesses, it is better-positioned than others to acquire late-stage drugs or smaller pharma names. The fourth-quarter 2009 earnings release on Jan. 28, 2010, could be just the catalyst shares need to take off to new highs.
One mutual fund that's certainly hoping so is the
(VHGEX), which carries Morningstar's three-star rating. Among the fund's 766 other holdings are sizable stakes in
is one of the biggest investment firms in the world, with more than half a trillion dollars in assets under management.
Like many other financials, Franklin rallied hard in 2009, gaining 65% on the year. 2008, however, was a significantly different story, and the firm saw its investible dollars decline by double-digit percentages entering this year.
Still, that hasn't stopped the company from increasing its dividend last week. Shareholders will see a 4.8% increase in payouts, now totaling 22 cents per share.
Expectedly, Franklin's underperforming (and higher beta) funds largely outperformed the market in 2009, drawing back a number of investors who weren't dissuaded by 2008's meager numbers and the potential for a reversal in the New Year. The firm's funds -- along with all of its competitors -- are currently embroiled in a lawsuit in the Supreme Court over the way mutual funds charge institutional vs. individual investors. Franklin's large international customer base should minimize ill effects if things don't work out in its favor.
(GSLIX) holds shares of Franklin Resources among its other 63 concentrated holdings. Others include
For the rest of this week's dividend stocks, check out the
portfolio on Stockpickr.
And if you haven't already done so,
today to create your own dividend portfolio.
At the time of publication, Elmerraji 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.