10 Dividend Stocks Increasing Payouts

(Dividend stocks increasing payouts report updated with news about Chevron's (CVX) acquisition of natural-gas prospects in Pennsylvania, the FTC's approval of Dow Chemical's (DOW) amended agreement with Huntsman (HUN), Williams' (WMB) quarterly results, and an investigation into Arch Coal's (ACI) acquisition of International Coal Group (ICO))
NEW YORK ( TheStreet) -- General Electric ( GE), Exxon Mobil ( XOM) and Johnson & Johnson ( JNJ) have joined a roster of companies raising their dividends in recent weeks .

Dividend activity has picked up in recent months and, according to Howard Silverblatt at Standard & Poor's, the first four months of dividend increases in 2011 have already surpassed total dividend increases for the full year of 2010.

The iShares Dow Jones Select Dividend ( DVY), an exchange-traded fund that tracks the Dow Jones U.S. Select Dividend Index, is up nearly 8% year to date. The WisdomTree LargeCap Dividend Fund ( DLN) ETF is up more than 9% so far in 2011.


The dividend universe has been out of favor for most retail investors the last few years, Lawrence Glazer, managing partner with Mayflower Advisors, said recently. The pendulum, however, has turned back toward the investment strategy lately as market watchers hedge against inflation and look for rising income streams.

Glazer told TheStreet that Europe- and U.S.-based large-cap dividend payers "are back in vogue now, relative to what was working last year." He said that for risk-averse investors trying to generate higher less-volatile returns -- but not necessarily beat the market -- investing in developed dividend payers makes a lot of sense.

Glazer suggested investors consider the " Dogs of the Dow ," the highest-yielding stocks in the Dow Jones Industrial Average, namely Verizon ( VZ), Johnson & Johnson, Merck ( MRK) and Kraft Foods ( KFT) -- blue chips that will generate higher returns than 10-year Treasury notes and which carry "the best balance sheets in the world."

To capture a proxy for domestic dividend-paying stocks, Glazer suggested considering ETFs like the iShares Dow Jones Select Dividend or SPDR S&P Dividend ( SDY), and for international dividend payers, the iShares Dow Jones International Select Dividend Index Fund ( IDV). The latter boasts a higher yield, he said, and "speaks to the idea of getting paid to go outside the U.S. and take on a little more risk." For a long-term sustainable dividend income, Glazer advised to look at an ETF like the Vanguard Dividend Appreciation ( VIG). Its yield is only around 2%, but "investors need to think about total return and appreciation potential," Glazer said.

Click on for a roundup of 10 dividend stocks increasing their shareholder payouts in recent weeks, ranked by average daily volume.... (Yields are based on May 2 closing prices.)

General Electric

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General Electric ( GE)

Company Profile : Fairfield, Conn.-based General Electric provides services ranging from aircraft engines, power generation, water processing & household appliances to medical imaging, business & consumer financing, media content & industrial products.

General Electric raised its dividend by 7.1% to 15 cents per share, payable July 25 to shareowners of record at the close of business on June 20. That brings General Electric's yield to around 2.9%.

While GE's dividend suffered a major pullback from the impressive 31-cent per share payout that investors were able to claim just a few years ago, it's an understandable change given the firm's excessive exposure to the credit market through its then-challenged GE Capital business unit.

Consistent increases in the firm's dividend payout are a priority for management; now GE can become a priority for income-seekers again.

In late April GE announced a 77% jump in first-quarter profits year-over-year to $3.43 billion, or 31 cents per share.

Revenue rose 6% to $38.45 billion.

Wells Fargo

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Wells Fargo ( WFC)

Company Profile : San Francisco-based Wells Fargo provides financial services through subsidiaries engaged in various businesses, including wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance and commercial finance.

Wells Fargo said on April 20 it would pay a common stock dividend of 12 cents per share for the second quarter, payable June 1 to stockholders of record on May 6. That brings Wells Fargo's yield to around 1.6%.

Wells Fargo, a banking giant that's been on analysts' sweetheart list since the depth of the recession, does not face rising costs right now . Wells' costs got a boost in late April following the Federal Reserve's announcement to keep rates low. With the cost of borrowing cheaper than ever (and the credit liquidity spread as wide as ever), this stock should be able to continue performing at high levels in 2011.

Wells Fargo made all the right moves in recent years, focusing on its core banking business by growing its deposit base (with help from a dirt-cheap Wachovia acquisition) and shoring up the quality of its loan book. Dividend investors take note, though: Wells is a big bank, so its ability to payout cash to shareholders is restricted by Fed approval. That means that Uncle Sam ultimately has final say over whether you're allowed to collect a dividend check.

Luckily, the Fed gave the firm the green light to hike its then-meager payout by 140% last month. The move puts its quarterly payout at a wholly sustainable level given the bank's fundamental performance.

Wells was highlighted recently as one of five stocks with key insider buying .

Exxon Mobil

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Exxon Mobil ( XOM)

Company Profile : Irving, Texas-based Exxon Mobil is engaged in the exploration, production, transportation and sale of crude oil and natural gas and the manufacture, transportation and sale of petroleum products.

On April 27 Exxon Mobil raised its dividend by 6.8% to 47 cents per share, payable on June 10 to shareholders of record on May 13. That brings ExxonMobil's yield to around 2.2%.

In absolute cash, Exxon Mobil's dividend increase represents a $149 million increase in its total payouts to shareholders.

One of the biggest tailwinds for Exxon Mobil has been the fast ascent of oil prices. Crude has rallied by double digits year to date, a price increase that has a direct positive effect on this supermajor's bottom line. While poor-performing natural gas prices have been a drag on the company's earnings, particularly given Exxon's increased exposure to it in the last couple of years, the buoyancy of the firm's more lucrative businesses have more than made up for it.

As one of the biggest energy companies in the world, finding new sources of growth is going to continue to be a challenge for Exxon management. While increasing commodity prices do bode well for the company, investors shouldn't expect substantial increases in oil prices to continue into perpetuity.

Challenges aside, Exxon will remain a promising core holding for any income investor -- particularly those looking for exposure to the commodity market. (For another look at Exxon, look back on a recent technical view of the stock .)

Exxon is one of TheStreet Ratings' top-rated oil and gas stocks .

Johnson & Johnson

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Johnson & Johnson ( JNJ)

Company Profile : New Brunswick, N.J.-based Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the health care field.

On April 28 Johnson & Johnson raised its quarterly dividend by 5.6% to 57 cents per share , next payable on June 14 to shareholders of record as of May 31. That brings J&J's yield to around 2.2%.

On April 19 J&J beat profit and sales expectations despite consumer recalls .

The consumer- and medical-products company said a weaker dollar and stronger sales of prescription drugs helped it beat quarterly expectations, and the company raised its 2011 earnings forecast.

J&J reported earnings of $3.48 billion, or $1.25 per share, compared with $4.53 billion or $1.62 per share a year ago.

Revenue came in at $16.2 billion, an increase of 3.5%. Wall Street was looking for $15.9 billion.

The Dow Jones industrial average component said it now expects full-year earnings to be in a range of between $4.90 and $5 per share, up from its prior estimate for a profit of $4.80 to $4.90 per share. Analysts, on average, expect J&J to earn $4.83 per share in 2011.

Newmont Mining

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Newmont Mining ( NEM)

Company Profile : Greenwood Village, Colo.-based Newmont Mining is engaged in the exploration for and acquisition of gold properties. It is also engaged in the production of copper, mainly through its Batu Hijau operation in Indonesia.

On April 19 Newmont Mining raised its dividend by more than 33% to 20 cents per share, payable June 29 to shareholders of record on June 16. The higher payout represents a 100% increase over the year-earlier dividend, bringing Newmont Mining's yield to around 1.4%.

Newmont Mining reaffirmed its fiscal 2011 guidance, expecting attributable gold production between 5.1 and 5.3 million ounces and attributable copper production between 190 and 220 million pounds.

Newmont Mining beat first-quarter profit expectations as revenue jumped 10%, offsetting higher mining costs.

The world's second-largest gold producer links its dividend to the price of gold, the net average of which was $1,382 in the first quarter this year.

Gold prices have been soaring to record highs recently, above $1,500 an ounce, which CEO Richard O'Brien said would provide Newmont with strong cash flow to continue growing shareholder payouts.

"I would say at $1,500 there is an opportunity for us" to consider stock repurchases, he said. "A share buyback is certainly one of the tools we could use, but one of many."

"Additional cash flow is an opportunity for us to continue to underlie that growth with more certainty over time, provide more flexibility ... and provide the opportunity for our shareholders to benefit through not just upward sloping production, but also upward sloping cash returns," O'Brien said.

RBC Capital Markets analyst Stephen Walker noted that "Newmont reported a solid earnings beat as costs remained at the low end of guidance range."

Chevron

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Chevron ( CVX)

Company Profile : San Ramon, Calif.-based Chevron provides administrative, financial, management and technology support to U.S. and international subsidiaries that engage operations of petroleum, chemicals, mining, power generation and energy services.

Chevron increased its dividend by 8.3% to 78 cents per share, payable June 10 to holders of record on May 19. That brings Chevron's yield to around 2.9%.

In late April Chevron reported first-quarter earnings of $6.2 billion , above the Wall Street consensus, though revenue of $58 billion fell short of expectations for $66 billion. Still, it was the latest strong earnings report from a major oil company.

All the Big Oil stocks have rallied year to date by roughly 15% on the higher oil prices, and investors haven't sent the stocks higher on the first-quarter results.

Chevron said production fell worldwide to a net 2.76 million barrels a day in the first quarter of 2011, down from 2.78 million barrels a day in the 2010 first quarter, with production increases in Brazil, Nigeria, Thailand and Canada, more than offset by normal field declines, "a 1% negative volume effect of higher prices on cost-recovery volumes and other contractual provisions as well as decreases due to weather- and maintenance-related downtime."

Analysts at UBS raised their earnings estimates through 2012 and price target on Chevron, noting that its exploration business is driving growth. The firm has a buy rating and $127 price target on the stock.

Chevron agreed to buy natural-gas prospects in Pennsylvania's Marcellus Shale formation, the energy company's second acquisition in the U.S. Northeast this year, according to May 5 reports.

Chevron will acquire leases covering 228,000 acres from Chief Oil & Gas and Tug Hill for undisclosed terms.

Dow Chemical

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Dow Chemical ( DOW)

Company Profile : Midland, Mich.-based Dow Chemical is engaged in the manufacture and sale of chemicals, plastic materials, agricultural, advanced materials and other products and services. It is also engaged in the property and casualty insurance and reinsurance business.

Dow Chemical raised its quarterly dividend by 66.7% to 25 cents per share, payable on July 29 to shareholders of record on June 30. Dow Chemical's 399th consecutive cash dividend, paid every quarter since 1912, brings the company's dividend yield to around 2.4%.

Not surprisingly, the "Great Recession" hit Dow hard as global demand for its offerings contracted amid uncertainty in the marketplace. But the $46 billion manufacturer of chemicals and other raw materials that are used in a wide array of consumer and industrial applications took diminished valuations across the board as an opportunity to grow its business through acquisitions at rock-bottom prices and shore up its efficiency while expectations remained uncharacteristically low.

Today, Dow sports a more attractive portfolio that should benefit from anticipated manufacturing increases in the next few years. In the process of shoring up its operations (and divesting itself of less admirable businesses), Dow has managed to strengthen its balance sheet and deepen its margins -- two major factors that should contribute to continued dividend payouts for shareholders.

The FTC approved Dow's application to amend its agreement with Huntsman ( HUN) related to its 2001 acquisition of Union Carbide. To obtain FTC approval for the merger, Dow agreed to address alleged anticompetitive effects of the deal in part by selling its ethyleneamines business to Huntsman. Dow agreed to separate the environmental systems of the ethylenamines business from other systems as its Freeport, Texas site.

The amendment reflects an understanding between Dow and Huntsman regarding a joint wastewater treatment project at the Freeport site.

Williams Companies

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Williams Companies ( WMB)

Company Profile : Tulsa, Okla.-based Williams Companies is engaged in finding, producing, gathering, processing and transporting natural gas, with operations in the Pacific Northwest, Rocky Mountains, Gulf Coast, the Eastern Seaboard and the province of Alberta in Canada.

Williams said on April 26 its board approved a regular cash dividend of 20 cents per share, 60% higher than its prior payout. The increased dividend is payable June 27 to shareholders of record on June 10. Williams is targeting an additional 10% to 15% increase for the quarterly dividends it will pay beginning in June 2012.

In March Williams was added to Goldman Sachs' ( GS) Conviction Buy List.

Williams' stock has appreciated 30% in the past year and 20% so far in 2011, demonstrating relative strength as the market corrected. The company's fourth-quarter adjusted earnings ascended 3.5% to 44 cents, outpacing analysts' consensus estimate by 58%. Sales stretched 4.2% to $2.4 billion. Williams' gross profit margin hovered at 43%, but its operating profit margin contracted from 19% to 18%, hurting profit.

Williams' stock sells for a forward earnings multiple of 20, a 44% premium to its peer average. But, its book value multiple of 2.4, sales multiple of 1.8 and cash flow multiple of 6.6 represent industry discounts of 45%, 39% and 31%, respectively. Of researchers following Williams, nine, or 81%, advocate buying its stock and two recommend holding it. None advise selling. Goldman is the most bullish on Wall Street, with a $38 target, consistent with a 28% rise. BMO Capital Markets has a $36 12-month target. Citigroup, rating Williams a buy, expects a rise to $32.

Late on May 4 Williams returned to year-over-year profitability with earnings of $321 million, or 54 cents per share. Revenue fell less than a percent to $2.58 billion.

The natural-gas transporter and exporter reported improved results, thanks in part to higher commodity prices, in its Midstream Canada and Olefins segment. Its Williams Partners ( WPZ) business reported a 4.7% decline in earnings due to interest payments on debt.

Arch Coal

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Arch Coal ( ACI)

Company Profile : St. Louis, Mo.-based Arch Coal is a coal producer in the United States, which sells coal to power plants, steel mills and industrial facilities.

Arch Coal's board approved a dividend increase of a penny per share to 11 cents, payable June 15 to shareholders of record on June 1. That brings Arch Coal's yield to around 1.3%.

Arch Coal recently raised its fiscal 2011 earnings guidance, and now expects earnings-per-share in a range between $2.03 and $2.52, including amortization of coal supply agreements. Excluding this charge, adjusted earnings per diluted share would be in the range of $2.10 to $2.60. Adjusted EBITDA is expected to come in between $930 billion and $1.05 billion range. Analysts were expecting Arch Coal to report EPS of $2.53 and EBITDA of $1.02 billion for the year.

On May 2, Arch Coal said it agreed to acquire all the outstanding shares of International Coal Group ( ICO) for $14.60 per share in cash, or around $3.4 billion. The deal is structured as a tender offer to be followed as soon as possible by a merger. The tender offer is expected to commence in mid-May.

ICG shareholders owning around 17% of outstanding shares agreed to tender their shares in the offer. The deal is expected to close in the second quarter of 2011.

Law firm Brower Piven announced an investigation into possible fiduciary duty to shareholders of International Coal, according to May 4 reports, seeking to determine whether the deal fails to maximize shareholder value.

United Technologies

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United Technologies ( UTX)

Company Profile : Hartford, Conn.-based United Technologies provides high technology products and services to the building systems and aerospace industries worldwide. It conducts its business through six segments: Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky.

United Technologies increased its dividend by 12.9% to 48 cents per share, payable June 10 to shareholders of record on May 20. That brings United Technologies' yield to around 2.1%.

Like Procter & Gamble ( PG), United Technologies has been home to strong capital appreciation in the past, albeit at a cost of substantially higher volatility.

Buyers beware: with deep exposure to the construction and aerospace industries, UTX owns a set of businesses that are extremely beholden to the ebb and flow of the business cycle. That said, UTX isn't quite the same as the other companies in its peer groups.

For starters, the company owns a portfolio of innovative firms that benefit from an absolutely massive backlog that's currently in excess of $50 billion. The yearlong lag in that backlog helps to smooth the company's earnings throughout tougher times.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

>To follow the writer on Twitter, go to http://twitter.com/miriamsmarket.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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