The biggest dividend news this week came from much-maligned conglomerate General Electric (NYSE: GE). The company has been on many income investors’ naughty list since early 2009 when GE slashed its quarterly dividend almost 70% to 10 cents a share from 31 cents. And while the GE dividend is still not quite back at the levels we saw a few years ago, the latest boost is worth noting as it is the second increase in less than a year.
Beyond the benefit of a bigger dividend, GE investors should be thrilled by the move because it proves GE has to be in a very good place with its financials. After all the flak this company took after slashing its dividend, it’s highly unlikely execs would be foolish enough to offer a bigger payday without a rock-solid balance sheet to back it up. Keep that in mind for the rest of this week’s stocks that are raising dividends. In an environment like this where investors are still a bit uncertain of their stocks, slashing a dividend payout would weigh heavily on share price.
That means only the most secure companies will be gutsy enough to deliver bigger dividends to shareholders, since they wouldn’t want to risk Wall Street’s ire by cutting the payout in a few months or a few years.
Here are the details on GE and four other picks raising dividends this week.
General Electric (NYSE: GE) said today it will raise its quarterly dividend by about 17% to 14 cents a share from 12 cents a share previously. The move is the second dividend increase by GE in a year after a 20% raise from 10 cents to 12 cents in July, and gives the company a new dividend yield of about 2.7% at current valuations. The new GE dividend will be dished out sometime in the first quarter of 2011.
The dividend rise is nice, but still leaves the payout at half pre-2009 levels. GE shares climbed following the announcement to their highest level since May. GE stock has added about +12% so far in December and is up about +17% year-to-date in 2010, nearly double the gains of the broader stock market.
Nucor Corporation (NYSE: NUE), one of North America’s largest steel companies, has boosted its quarterly payout a hair from 36 cents a share to 36.25 cents. The nominal increase gives NUE stock a new dividend yield of about 3.4%, and is payable Feb. 11 to stockholders of record Dec. 31. Though not particularly impressive in size, the dividend is worth noting for its consistency.
The NUE dividend boost marks Nucor’s 151st consecutive quarterly cash dividend, spanning 38 years. In addition, from 2000 to 2010 Nucor’s base dividend has increased approximately ten-fold. NUE stock has had a rough 2010, slumping about -10% despite gains of about +9% for the Dow Jones Industrial Average. Slumping industrial demand has weighed on this steel stock, however it’s worth noting shares have bounced back about +10% in December so hopes of a recovery could mean things are turning around.
The Western Union Company (NYSE: WU) announced a 17% increase in the company’s quarterly dividend from 6 cents a share to 7 cents a share. That gives WU stock a dividend yield of about 1.5% at current valuations. The new Western Union dividend is payable Dec. 31 to shareholders of record Dec. 20.
Western Union has had a volatile year overall, currently trading essentially at the same levels it saw in January. Shares are around the middle of WU stock’s 52-week range of $14.65 to $20.26, and have seen a decline of about -1% on the year. But for what it’s worth, WU raised its full-year 2010 guidance in October so its next earnings report could help lift shares if the company proves it is improving.
Electronics and energy systems midcap Roper Industries Inc. (NYSE: ROP) approved a 16% increase in its quarterly dividend last week, marking 18 years in a row with a dividend boost. The move raises Roper’s dividend from 9.5 cents a share to 11 cents each quarter, and gives ROP stock a new dividend yield just shy of 0.6%. The new dividend is payable Jan. 28 to shareholders of record Jan. 7.
Granted, the dividend alone isn’t much to shout about. But the consistent history of quarterly payouts coupled with steady growth makes Roper a stock of note. Shares are up nearly +50% year-to-date in 2010, with +34% gains for ROP stock since Sept. 1. Roper has been using acquisitions to diversify and expand its business, the latest being a $525 million purchase of vendor iTradeNetwork Inc. Previous buyouts have also been starting to yield bigger sales as Roper reported its third-quarter profit rose +49%, topping forecasts. The company also raised its 2010 earnings estimate, implying more gains are yet to come.
C.H. Robinson Worldwide, Inc. (NASDAQ: CHRW), a leader in shipping and logistics, announced a dividend increase from 25 to 29 cents a share for its next quarterly payout. The dividend is payable Jan. 3 to shareholders of record Dec. 20, and gives CHRW stock a new dividend yield of about 1.5% at current valuations.
Though the yield isn’t all that grand, it’s worth noting that C.H. Robinson has been delivering far more lately to shareholders than just its quarterly payout. The stock is up +32% year-to-date in 2010, about three times the broader stock market, and is just a little off a new 52-week high. C.H. Robinson Worldwide is a transportation services and logistics company, meaning it does more business as more packages and products get shipped around the world. CHRW has grown its EPS for three straight quarters and investors have shared in this stock’s success.
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the funds listed here. Follow him on Twitter at http://twitter.com/JeffReevesIP.