BALTIMORE (Stockpickr) -- A terrible day for traders yesterday sent all major indexes into an "official" correction -- a double-digit percentage drop from the lofty levels they saw at the end of April. In a big way, economic concerns over jobs data, earnings numbers and the eurozone debt crisis have sent investors flocking back to less-volatile investments such as gold and treasuries. But while Wall Street runs scared, dividend investors are enjoying a strong turnout for another consecutive week.
That's because regardless of where the market churns in the short term, as long as their companies continue to conduct business as usual, they'll continue to collect dividend checks.
And more often than not, they're enjoying lofty capital gains too. 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. That means that when a company actually increases its dividend, investors would do well to take notice.
With that in mind, let's take a look at the companies that
Cliffs Natural Resources
is a $6.4 billion mining company based out of Cleveland, Ohio. But shareholders the world over are celebrating management after they decided to raise the company's dividend payout by 60% last week. Currently, Cliffs pays out 14 cents per share -- a 1.17% dividend yield.
Cliffs is a major iron ore producer, with a hand in more than half of North America's mining capacity. And until 2007, the company managed to do that with a debt-free balance sheet. Cliffs has since added borrowings to its plate, but an above-average knack for cash generation has kept its newly upped dividend looking strong for the short term. I'm not particularly bullish on iron miners right now, but for a long-term dividend play, this low-yielding company at least offers some diversification to your income portfolio.
One of Cliffs' biggest investors is the
(VMIAX), which also counts stakes of
in its half-billion dollar portfolio.
Who Owns Amazon?
is repeat visitor on our weekly list of dividend increasers. The company had previously upped its payouts to shareholders in early March, and last week, Public Storage did it again, hiking its quarterly dividend by 23% to 80 cents per share. That gives investors an annual yield of 3.68% barring any improvement in the stock's share price right now.
From a fundamental perspective, Public Storage is a high-performing REIT with a huge geographic footprint, stable income and a brilliant balance sheet -- not to mention its history of returning cash to shareholders. Decent yields are paramount for trusts such as Public Storage, which was able to maintain its operational integrity as the real estate market imploded back in 2008. With market conditions seemingly uncertain once again, this company delivers the security of a strong quarterly payout.
That's appealing to shareholders of the
(TRREX), which owns positions in
Simon Property Group
in addition to a large position in Public Storage.
$2.7 billion dollar industrial bearing manufacturer
may not operate in the most glamorous of industries, but its overseas growth potential is making it an attractive play to investors right now nonetheless. Management sweetened that pot last week with a 44% dividend increase, brining the company's quarterly payout to 13 cents per share.
From an income investing perspective, I'm not entirely sold on Timken's potential prowess right now. While the company's 1.8% yield is nothing to scoff at, it's nothing to write home about either. Major business ties to Detroit's troubled automakers and a mediocre balance sheet would make me wary of Timken's value.
But the company still has its fans, including the
(RYPNX), which has returned more than 7% to investors year-to-date. The fund is also betting on
For the rest of this week's dividend stocks, check out the
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