BALTIMORE (Stockpickr) -- Despite the fact that 2010's biggest week for dividend increases is just a month behind us, Wall Street hit another milestone last week with the year's fewest dividend increases. But last week's lack of dividend activity shouldn't be cause for alarm. With relatively few companies reporting their quarterly numbers right now, it's normal to see dividend announcements fall in kind. Remember, though: Just because fewer stocks are announcing bigger shareholder payouts doesn't mean that the ones that do are any less significant.
Why all the focus on companies that choose to hike their dividend payouts? Historically, companies that pay higher 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 means that when a company actually increases its dividend, investors would do well to take notice.
Here's a look at
One company that boosted its dividend recently is
, a Peruvian financial services company that owns insurance, investment banking and retail banking subsidiaries. Credicorp's biggest division is Banco de Credito del Peru, the country's leading retail and commercial bank, which provides nearly 95% of the company's revenues. Last week, management announced a 13.3% dividend increase, bringing the annual payout to $1.70 per share.
A strong recovery in Peru should drive significant loan growth for the bank, which saw significant devaluation in 2008 thanks to a selloff of both financial services plays and Latin American stocks. In 2010, the tables seem to have turned on Peru's economy, and Credicorp is expecting its loan books to achieve 18% growth this year.
One of the biggest growth areas for lenders in developing countries should be microloans. These tiny, relatively short-term loans provide higher margins than traditional lending arrangements and stimulate significant economic growth from the ground up. They should also keep investors interested in this banking play stateside. Credicorp's dividend yield currently sits at 1.92%. The company's thick margins and growing cash flows should keep those payments flowing this year.
may attract industry attention by being the biggest player in its field, but the company keeps investors satiated with a 3.6% dividend yield -- one that just got bumped up thanks to an 8.3% increase.
Watsco has built a consistent track record of acquiring strong local distributors to increase the size of its network of heating, ventilating and air conditioning operations for the past decade. And although stiff competition from less-segmented brands have put the squeeze on Watsco's margins, new EPA regulations could push the company on the path to higher profitability.
One firm that's hoping for an uptick in Watsco is
, a $2 billion New York-based equity hedge fund. In addition to Wasco, the fund also owns stakes in
With an increase in consumer spending in the early months of 2010, apparel brands such as
are finally seeing solid revenue numbers. And thanks to a 22.2% dividend increase, investors are seeing some pretty impressive numbers themselves, with a quarterly payout of 11 cents per share. That increase puts Oxford's yield at a competitive 2.06%.
Oxford designs, produces and markets apparel for its own brands as well as private labels, selling directly to wholesalers, national chains, and department stores. The company's higher-margin branded products, which account for around 64% of sales, include names such as Tommy Bahama and Ben Sherman.
Oxford's business model is a strong one for a fickle apparel market. With high cost variability and outside manufacturers, the company can scale down its operations relatively easily without bleeding red ink. Despite significant losses in 2009 due to one-time expenses, the company has maintained a solid track record of profitability in the downturn, and its dividend remains fairly safe -- despite margins that are lower than we typically like to see.
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-- Written by Jonas Elmerraji in Baltimore.
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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
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Investor's Business Daily