BALTIMORE (Stockpickr) -- If the recent fluctuations in the market haven't made you think about beefing up your dividend portfolio, they should. After all, dividend payouts help guarantee some semblance of performance, even when stock performance is in the gutter.
And the companies that increase their shareholder payouts are worth an even closer look.
With that in mind, it's time to take a closer look at few of the companies that announced dividend increases last week. Now is as good a time as ever for dividend plays, with yields as high as ever on some of the world's most attractive stocks.
are a good place to be. Over the last 36 years, dividend stocks 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 a study from NDR. And right now, companies that are willing to part with cash in arguably tough times are worth a second look.
That said, here's a look at
2010 has been a tough year overall for
. The firm has seen its shares rally and reverse more than a few times already this year.
But while shares of the tobacco firm are down just over 2% on the year, that hasn't stopped investors from raking in overall positive returns thanks to a hefty 5.77% dividend yield. Those payouts are only getting better now thanks to the 12.5% dividend increase the company announced last year, bringing its payouts to $1.125 per share.
Lorillard is a major player in menthol cigarettes, claiming 35% of the market -- which in turn contributes more than 90% of the company's revenues. The company's well-known menthol brand, Newport, boasts some of the highest prices in the industry, a major reason behind the company's hefty double-digit net margins.
But all is not well for Lorillard. The potential for unfavorable FDA-imposed marketing and sales restrictions on menthol cigarettes threatens to cut into Lorillard's otherwise impressive business. The risks of increased restrictions are a major black cloud over shares. But with less debt than cash on the books right now, they're one of the few black clouds faced by shareholders.
Among the company's list of shareholders is the
(VICEX), a mutual fund that invests exclusively in so-called "sin stocks" -- companies that deal in ethically-dubious products like cigarettes, alcohol, and gambling. Other Vice Fund holdings include
Philip Morris International
As impressive as Lorillard's dividend may be, the payouts are even higher at
, a property-casualty insurer. The company currently sports a 5.9% dividend yield following a 1.3% increase in its quarterly payouts last week. While the improvement in Cincinnati's income potential was small, it added on to what already amounted to an impressive payout, and caught investors' attention at the same time.
Cincinnati benefits from a clearly defined growth plan, opting to partner only with small insurance agencies and independent agents, and eschewing larger multi-carrier shops. That strategy has worked well to differentiate Cincinnati in the past, giving the company preferential status among its core clients. Although insurers were hit hard in the financial crunch of 2008 (thanks in part to trading of high risk insurance-fuelled financial instruments), Cincinnati's conservative balance sheet has helped the company remain profitable through it all -- while securing the stock's dividend payouts.
(ABMIX) is one of Cincinnati's largest institutional shareholders. The fund, which holds Morningstar's coveted five-star rating, also owns stakes in
Who Owns Cincinnati Financial?
Stock performance has been nothing if not consistent this year for owners of
, a Michigan-based electric utility. Shares of the company are up more than 13% on the year, buoyed in part by a consistent dividend payout that grew 4.7% last week.
ITC's regularity is thanks in large part to a business that most would consider boring: regulated electric. But while ITC's operations might not be particularly exciting, the company's financials are. ITC enjoys a 21% net margin thanks to recession resistant revenues and legally locked-in electricity prices. Although the company has a fair amount of long-term debt -- like those in other capital intense industries -- its obligations should continue to be more than manageable this year.
One of ITC's biggest institutional shareholders is the
(KSCVX), which owns more than 842,000 shares of the electric company. Other fund holdings include stakes in
For the rest of this week's dividend stocks, check out the
on 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, 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.