McDonald’s (NYSE: MCD) stole the show this week with its dividend increase. Still, that couldn’t take the onus off Microsoft (NASDAQ: MSFT), which fell flat after shareholders were infuriated its dividend hike wasn’t as substantial as they wanted.
But dividend stock investors have many more options out there if they want to get a piece of high-yield investments. A number of big-name blue chips saw increases to dividends this week.
Here are some of the highlights from dividend increases in the week of Sept. 20 to 25.
ConAgra Dividend Increase
Reflecting good cash flows on the strength of consumer staples sales, ConAgra Foods (NYSE: CAG) approved a dividend increase of 15% this week from 20 to 23 cents per share. That gives ConAgra a new dividend yield of about 4.3%. The new ConAgra dividend rate is payable Dec. 1 to stockholders of record on Oct. 29.
ConAgra Foods has benefitted from the slowdown in consumer spending, with folks eating home more and eating out less. With recognizable brands like Banquet, Chef Boyardee, Healthy Choice, Marie Callender’s and others, ConAgra Foods products have seen big success. Still, the packaged food company strength hasn’t been strong enough. In its earnings report on Tuesday, Conagra reported its fiscal Q1 EPS fell 11% to 34 cents, missing views by 5 cents. Sales also fell 2.4% year over year. For dividend watchers, however, it’s worth noting that CAG has offered quarterly paydays since 1976.
Covidien Dividend Increase
Yesterday, health care giant Covidien plc (NYSE: COV) raised its quarterly dividend by 11%, from 18 to 20 cents per share. The move now gives Covidien a dividend yield of just over 2%, and the next dividend is payable on Nov. 8
The medical products and pharmaceutical company said last week that it expects fiscal 2011 net sales to increase from 6% to 9% over the previous fiscal year’s numbers. COV reports Q3 earnings on or around Nov. 15, so we’ll see if that forecast holds. Covidien stock recently set a new 52-week low in August after unloading its specialty chemicals business but has bounced back in September with the broader market.
Lockheed Martin Dividend Increase
Lockheed Martin Corp (NYSE: LMT) also raised its dividend on Thursday. Specifically, the aerospace and defense giant raised its quarterly dividend by 19% from 63 cents per share to 75 cents. This marks the eighth-straight annual increase in its quarterly payout.
Lockheed will pay the dividend Dec. 31 to shareholders of record as of Dec. 1. The increase gives the company a new annualized dividend yield of nearly 4.2% at current valuations. Lockheed has struggled recently, with shares down about 10% in the last quarter. LMT continues to cut costs as a tightening federal budget situation is squeezing defense spending. We’ll see if that changes after the midterm elections. On the earnings front, Lockheed is scheduled to report on or around October 18.
Microsoft Dividend Increase
Early in the week Microsoft (NASDAQ: MSFT) announced a boost in its dividend about 23% from 13 cents to 16 centsper share. The move gives MSFT stock a dividend yield of about 2.6% at current valuations.
Though a 23% dividend hike is nothing to sniff at, many shareholders were very disappointed at the move and were expecting a new yield north of 3%. As a result, MSFT stock has been punished all week with a 3% decline as of early trading this morning. The slide comes as just the latest chapter in a brutal 2010. Shares of Microsoft are off nearly 20% this year, compared to a flat market. The preliminary earnings date for Microsoft’s Q3 report is October 28.
McDonald’s Dividend Increase
McDonald’s (NYSE: MCD) made big news this week by announcing another dividend increase, becoming the sole U.S. company to increase its dividend payouts every year since it went public some 34 years ago. The 11% dividend hike from 55 cents per share to 61 cents gives the fast-food giant a new dividend yield of about 3.3%.
The McDonald’s dividend will be paid on Dec. 15 to shareholders of record on Dec. 1. The move isn’t cheap either and is estimated to cost the hamburger giant an additional $65.4 million per quarter. But that just goes to show you how strong MCD stock is right now. From its McCafe success to its breakfast sales dominance, McDonald’s remains the low-priced restaurant of choice. Shares are up about 20% so far in 2010 and show little sign of slowing down. Look for McDonald’s earnings on October 21.
Realty Income Dividend Increase
Realty Income Corporation (NYSE: O), the self-proclaimed “Monthly Dividend Company,” according to a rather pretentious trademark, kept good to its schtick with another dividend increase — marking the the 52nd consecutive quarterly increase and the 59th dividend increase since Realty Income went public in 1994.
Granted the change was to $0.1439375 per share from $0.143625 per share or about 2%. But those monthly dividends add up to a plump 5.1% dividend yield at an annualized rate. And if the track record of increases hold, that may get even better. The small cap real estate investment trust is seeing decent share appreciation to, up nearly 30% so far in 2010.
Comtech Dividend Debut
Joining the ranks of dividend stocks this week is Comtech Telecommunications Corp. (NASDAQ: CMTL). After posting earnings this week that more than doubled in its fiscal fourth quarter, the company initiated a quarterly dividend of 25 cents per share. Annualized, this gives Comtech a dividend yield of about 3.7% — not bad for a debut.
The company, which makes amplifiers and communications gear used by the U.S. military, did lower its guidance for fiscal year 2011 after earnings, however. Like the other defense stocks including the aforementioned Lockheed Martin, a slowdown in federal spending is weighing on contracts.
As of this writing, Jeff Reeves did not own a position in any of the stocks named here. You can follow him at twitter.com/JeffReevesIP.
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