Annual Dividend Hikes

In the beginning of the year, I reviewed my 2006 passive income, mainly from dividend paying stocks I own.

Here is the same list of companies with any quarterly dividend hikes seen in 2007:

 

2005 Dividend

2006 Dividend

2007

Dividend

% Increase

Ranking

IBM

$ 0.20

$ 0.30

$0.40

33%

1

ExxonMobil

$ 0.29

$ 0.32

$0.35

9%

6

Pfizer

$ 0.19

$ 0.24

$0.29

21%

2

AT&T/Bellsouth*

$ 0.29

$ 0.29

$0.47

62%

14

Edison Int.

$ 0.25

$ 0.27

$0.29

7%

13

Medtronic

$ 0.10

$ 0.11

$0.13

14%

5

Pepco Energy

$ 0.25

$ 0.26

$0.26

0%

12

Duke/Spectra*

$ 0.31

$ 0.32

$0.33

3%

7

Merck

$ 0.38

$ 0.38

$0.38

0%

3

GE

$ 0.22

$ 0.25

$0.28

12%

8

Lowes

$ 0.03

$ 0.05

$0.08

60%

10

P&G

$ 0.28

$ 0.31

$0.35

13%

9

Chevron

$ 0.45

$ 0.52

$0.58

12%

11

AnheuserBusch

$ 0.27

$ 0.30

$0.32

7%

4

 

 

 

Average

21%

 

Notes: These are quarterly dividends, Ranking is by current weight in my taxable investment portfolio, *These stock had some conversion factor through merger or spinoff

All but 2 companies have raised their dividend. Merck, understandably with the Vioxx liability hanging over its head up until recently, did not raise its dividend, but I hope it will resume its dividend next year now that the Viox liability is becoming much clearer.

The dividend hikes (including the ones that didn't move) were an average of 21% this year, even better than the average 17% dividend hike in 2006. While you can't read too much into these hikes, companies (like Merck) don't raise dividends when they aren't confident they can pay them.

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Comments (3)


Why do you invest in pharmaceuticals? To me, they are one place I wouldn't want to invest in. Why not invest in a bank or two instead?

Dividend stocks are great to have in a portfolio. Unfortunately, most people see the dividend yield and aren't impressed because it's usually pretty low. However, the buy and hold strategy coupled with an increasing dividend makes it very attractive. After a few years, the yield on your initial investment can be quite high.

Since you seem to be investing for the long term. How about housing stocks? They are beaten down. Maybe still have some left to go. But give it a few months and check them out. Some dividend yields are passing the 5% mark. Companies like TOL and KBH should be able to sustain a long term slump.

What do you think?

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