This year, S&P 500 companies are expected to pay a record
$339 billion in
. That's an 8.9% increase over the $312 billion in
dividends paid in 2013.
But why settle for an 8.9% increase? If you're into dividend
growth, think big - think double-digit big. Four familiar,
established S&P 500 members have already announced big
this year. When cobbled together, these companies provide a tidy
yield on a well-branded selection of stocks. I could argue these
stocks fit into any income-investor's portfolio.
I'll start with the eye-popper,
Boeing (NYSE: BA
, whose dividend payout rocketed 49% to $0.73 a share with the
first-quarter payout. The aerospace giant's management must
have had an epiphany. Over the prior five years, annual
averaged a little over 4%.
Of course, to expect 49% annual dividend increases in
perpetuity is to expect annual visits from Santa Claus. On the
other hand, double-digit dividend increases through the rest of
the decade is to engage reality. I say that because Boeing boasts
a huge backlog of jet orders, valued at over $400 billion.
It also boasts a bulging cash account, which divides to $20 a
share, that easily services a rising payout.
Ford Motor Company (
) (3.3% yield)
is another company embracing its dividend with gusto. Last month,
Ford's board of directors approved a 25% hike in the quarterly
dividend, to $0.125 a share. This from a company that
eliminated its dividend and nearly perished during the 2008-2009
Thanks to a government handout, a new management team, and a
revamped portfolio of stylish vehicles, Ford has turned lemons
into a first-rate dividend grower: Over the past 30 months, Ford
has more than doubled its dividend payout.
I don't expect another 25% increase from Ford next year, but
8% - to - 10% annual increases is reasonable, at least for the
next few years.
Like the Ford Motor Company, the
Dow Chemical Company
) (3.2% yield)
had to reset the dividend clock after the last recession. Dow's
quarterly dividend was slashed to $0.15 a share from $0.42.
Since then, the chemical giant has doggedly clawed back lost
ground. The latest claw-back increased the quarterly payout 15%
to $0.37 a share.
Again, expectations need to be tempered. Since Dow
reestablished dividend growth in 2011, the rate of growth has
sequentially trended lower. But 10% annual increases, the
historical norm, are entirely within Dow's payout capability.
Once the bell of the ball,
Cisco Systems (
) (3.4% yield)
is today one of Cinderalla's nasty half-sisters. The company has
simply been unable to gain traction: Sales across most of its
divisions have either stagnated or declined.
Nevertheless, Cisco still has a lot to work with. The company
controls 53% of the router market, and 59% of the Ethernet
switching market. Selling routers and Ethernet switches
generates $47 billion in annual sales. These sales, in turn,
generate a lot cash. Cisco sits atop a $47-billion cash account,
which covers the 11.7% dividend increase, and the full
dividend itself, many times over.
To be sure, Cisco is going nowhere fast, but investors should
expect to receive at least 10% annual dividend increases for
years to come. Continual dividend growth, in turn, will
eventually lead to share-price growth.
are unlikely to set the world ablaze with their business
prospects. But if you're an income investor seeking safe dividend
growth, these companies could set your portfolio yield
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