By Michael Kaye
In the midst of another bruising bear market in 2002, equity investors do have one thing to smile about: An increasing number of businesses are hiking their dividends. According to a new Standard & Poor's research paper, of the nearly 7,500 publicly owned companies that report dividends to S&P, 1,046 dividend increases were registered in the first nine months of 2002, up from the 990 increases posted in the January to September period of 2001. Dividend cuts for the first nine months fell 23%, to 58, from 75 in the same period of 2001, while dividend omissions dropped 20% to 47.
Why the increase in the number of outfits boosting payouts? "The improved dividend environment reflects more and more companies recognizing that investors need a tangible reward for hanging on to stocks in the weak market," said Joseph Tigue, managing editor of S&P's investing newsletter The Outlook, in a release accompanying the report.
It appears that amid the treacherous market, more companies have "gotten religion" on the merits of returning more cash to shareholders (See BW Online, 10/10/02, "The Lure of Dividends"). This may actually benefit both parties as a stable or rising payout could help to prop up an outfit's share price. And that got us at S&P to thinking: What about the corporations that have consistently boosted their dividends through both the bull and bear markets of the past few years?
For this week's screen, we drew from the list of stocks that carry Standard & Poor's highest investment ranking, 5 STARS (buy). That means that S&P analysts expect them to outperform the overall market over the next 6 to 12 months. Then, we looked for those stocks that have a yield higher than the average of the S&P 500 and have increased their dividend payout each year since 1998. These 12 names emerged:
• Hospitality Properties Trust (HPT )
• Vornado Realty Trust (VNO )
• Chelsea Property Group (CPG )
• Amsouth Bancorp (ASO )
• Wilmington Trust Corp (WL )
• ExxonMobil (XOM )
• Banknorth Group (BKNG )
• Allstate Corp. (ALL )
• J.M. Smucker (SJM )
• Citigroup Inc. (C )
• National Commerce Financial (NCF )
• Leggett & Platt (LEG )
Kaye is a portfolio services analyst for Standard & Poor's