BALTIMORE (Stockpickr) -- A total of 18 companies raised their dividends last week, a sign that no matter how bad things appear on Wall Street, companies continue to perform well fundamentally in 2010. After all, with investor anxiety high and volatility through the roof once again, a strong financial footing is the only way that a company would opt to part with the cash for additional dividend payouts.
While dividends were eschewed in large part by growth-hungry tech investors of the last decade, 2008's recession reminded us that when the market grinds to a halt, stable dividend stocks are a way to continue to generate returns. And when the market's good, dividend stocks are even better -- historically, companies that pay higher dividends materially outperform those that don't. In fact, 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, according to a study from NDR.
With that in mind, let's take a look at the companies that
Like many of its competitors right now, $18 billion defense contractor
is scrambling to shift its product and service offerings to account for what many predict to be soft defense spending for the next several years. But that hasn't stopped the company from maintaining a hefty dividend, which increased 9.3% last week to 47 cents per share.
Northrop is filling the potential revenue gap it faces by focusing increasingly on IT services and leveraging its extensive defense contracting experience to win deals with other branches of the government. It's a wise move right now, and as long as it remains a tertiary part of the business to start, it shouldn't distract from Northrop's core operations developing weapons systems and building ships.
One fund that's betting on Northrop's continued success -- and dividend -- is the
(VICEX), which focuses on investing in companies that could be considered morally questionable and carries a three-star rating from Morningstar. Other Vice Fund holdings include
Philip Morris International
is enjoying strong stock performance this year, as affluent customers flock back to its stores, ready to part with discretionary cash. The company has been using that cash to reward shareholders, who saw their stakes crash in late 2008 as purse strings tightened and corporate borrowings got equally tight. Nordstrom's dividend increase last week brings the company's yield to 2%, with quarterly payouts of 20 cents per share.
While Nordstom has been able to differentiate itself from other high-end department stores, its main base of consumers is quick to change where they spend their money, opting for a blend of price sensitivity and brand recognition. So while Nordstrom currently enjoys relatively thick margins for a retailer, management needs to keep working hard in order to enjoy continued success.
Among Nordstrom's institutional holders is the
(VTSMX), which tracks the
index. Other holdings in the fund include S&P constituents
This year has also been a reasonably strong one for
, which has seen its shares rise close to 4%, compared with a broad market that's down for the year. But the company has delivered even better returns to its investors thanks to a generous dividend yield, which only got better last week when Clorox increased its payout by 10%. This brought its quarterly dividend to 55 cents per share.
Clorox has seen increasing pressure from competitors recently thanks to cost-conscious consumers and a burgeoning private label industry, but so far the company has managed to stave off its challengers and maintain the top position in nearly three-quarters of the categories it competes in. Offerings such as Clorox Bleach, Burt's Bees and Glad all have strong brand recognition and should continue to carry advantages to finish up 2010. And Clorox's dividend offerings look safe too -- the company generates substantial cash flows and carries only a manageable debt load.
For the rest of this week's dividend stocks, check out the
Who Owns Clorox?
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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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
, and has been featured in
Investor's Business Daily