It's a flagging economy and thus investors will obviously
prefer to bet their bucks in the safer counters. Investors, in
order to shield themselves from the upheavals in the financial
world, are now diligently choosing their portfolio of stocks that
can give them the best returns.
On that note, while building the portfolio, one should not
ignore the underlining dividend growth potential, which can also
enhance the total return.
Investors prefer an income generating stock, and a dividend
paying stock is always a preferable option. Meanwhile, keeping
the hard cash in the bank's locker is much a safer alternative
than investing in stocks, so offering higher return on stocks
becomes obvious to compensate for the risk undertaken.
Higher dividend growth companies have a better chance to
attract investors that in turn provides an impetus to the share
price. Through this strategy, the companies bolster investors'
confidence on the stock, thereby persuading them to either buy or
hold the scrip instead of selling them.
A consistent dividend payment and increasing the same at
regular intervals primarily reflect the company's sound financial
position, defined future prospects and intention to enhance
shareholders' value. But what might hurt shareholders' sentiment
is a dividend hike in one year, followed by a cut in the next
However, not all companies pay dividend regularly, and
furthermore some companies do not declare dividend. Nonetheless,
this never suggests that the stock is devoid of growth
propositions, unless the underlying fundamentals indicate so. It
might be that the companies want to preserve the earnings for
future expansions rather than to payout in the form of dividend.
So, do consider all the factors while picking the stocks.
Every stock has its own strengths and weaknesses that need to
be evaluated. Dividend increase remains one of the criterions to
be considered before taking any investment decision, but apart
from that an investor must take into account the top and bottom
lines' growth potential, free cash flow generation capability,
cash flow per share, return on capital and debt-to-total capital
ratio to name a few. A diligent use of these tools will help in
assessing and scrutinizing equity investments.
Dividend increases have now become a common trend among
companies boasting a stable cash position and healthy cash flows.
These strategies not only enhance shareholders' return but also
raise the market value of the stock.
The companies which recently increased quarterly dividend
include, video game and entertainment software retailer,
) by 10% to 27.5 cents; textbook publisher and financial
The McGraw-Hill Companies, Inc.
) by 9.8% to 28 cents; media and marketing company
) by 6.5% to 40.75 cents; specialty retailer of women's apparel
Limited Brands Inc.
) by 20% to 30 cents; two beverage companies
) by 5.6% to 56.75 cents and
Dr Pepper Snapple Group, Inc.
) by 12% to 38 cents a share.
Few other stocks that are worth a look on the dividend
), which raised its quarterly dividend by 20% to 19.5 cents; oil
and gas exploration company,
Occidental Petroleum Corporation
) that raised its dividend by 18.5% to 64 cents; and Canadian
communications and media company,
Rogers Communications Inc.
) hiked its dividend by 10% to 43.5 cents.
COMCAST CORP A (CMCSA): Free Stock Analysis
DR PEPPER SNAPL (DPS): Free Stock Analysis
GAMESTOP CORP (GME): Free Stock Analysis
LIMITED BRANDS (LTD): Free Stock Analysis
MEREDITH CORP (MDP): Free Stock Analysis
MCGRAW-HILL COS (MHP): Free Stock Analysis
OCCIDENTAL PET (OXY): Free Stock Analysis
PEPSICO INC (PEP): Free Stock Analysis Report
ROGERS COMM CLB (RCI): Free Stock Analysis
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