Doubling Your Income The Easy Way

NEW YORK (TheStreet) -- With 10-year Treasuries yielding stubbornly below 2%, the hue and cry among advisers has been to look for higher yielding dividend stocks. That might be decent advice for a whole lot of folks who need yield, but it's incomplete.

Specifically, investors should be looking for high yield stocks that have a track record of growing their dividends.

Not only is this sound advice, but it's applicable to a lot more investors.

The most obvious investors for this kind of strategy are retirees and near retirees, looking for income.

The chart below shows a group of companies that have at least doubled their dividend during the past 10 years.

That means shareholders who have owned them during the past 10 years have doubled their income too.

Many have enjoyed strong capital gains along the way.

For instance, in November 2002, McDonald's ( MCD) shares were about $16. Today they're about $87.

Source: DRI Historical Dividends

But a buy-and-hold (and watch!) strategy can also deliver the kind of growth that even conservative investors who want to preserve capital can get behind. Specifically, in the chart above, consider Darden ( DRI), which has seen its dividend rise nearly 30 times during the past 10 years.

Now here's what's interesting. In November 2002, Darden shares were $21.63 and paid an annual dividend of about 16 cents a share for a yield of approximately 0.75%. If you made a $10,000 investment at the time, you would have about 462 shares. Assuming you did not reinvest the dividends, your 462 shares would be throwing off $924 of cash, for a cash on cash return of 9.24% annually, a figure which handily beats the S&P 500 five and 10 year performances.

One other stock that should be on the list is Altria Group Altria ( MO). It frequently does not show up on charts like this because the 2008 spinoff 2008 spinoff of Philip Morris ( PM) distorts the picture, requiring a little more analysis. Basically, if you owned the stock in 2002 and you still hold it, you've done very well in income as well as capital appreciation.

With respect to income, when the spinoff of Philip Morris International was completed in March 2008, MO shareholders received one new share of PMI for every MO share they had. In 2002, MO was paying a dividend of $2.44 annually. Today the two companies combined are paying $5.16, for a picture perfect double.

Although there is no way to guarantee these companies will continue to raise their dividends. There are good reasons to believe that they will. Given all of the companies shown above have plenty of cash on their balance sheet, there are no fiscal hurdles to prevent them from raising dividends in the near term. Moreover, even during the financial crisis, the companies above continued to pay and increase their dividends.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Oliver Pursche is President of Gary Goldberg Financial Services, a boutique money management firm located in Suffern, NY. Additionally, Mr. Pursche is the Co-Portfolio Manager for the GMG Defensive Beta Fund, and a Founding Partner of Montebello Partners, llc. In his role as President of GGFS, and as a member of the GGFS Investment Committee, Mr. Pursche helps oversee the investment portfolio of over 2000 clients with over $500 million dollars in assets. Mr. Pursche frequently provides market and economic commentary on CNBC and Fox Business News, as well as often being interviewed by The Financial Times, US News and World Report, Thomson Reuters, Bloomberg Businessweek, and the Associated Press regarding his and the firms views on the latest market news and events. Mr. Pursche's views on the market and investment strategies have been featured in the Wall Street Journal, Investors Business Daily, Smart Money, USA Today and other national business publications. In addition to writing for TheStreet.com, he is also a weekly contributor on Forbes.com and BankRate.com. His daily market commentary can be read at www.betafundcommentary.com or you can listen to him on www.financialtalkshow.com weekdays at 10:00 AM.

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