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Motley Fool: 4 Stocks That Pay You
Companies that are growing their dividends can make you rich in more ways than the obvious.
By Rick Aristotle Munarriz
Updated: 9:18 a.m. ET Aug. 8, 2005
With interest rates rising and inflation fears bubbling, income investors have some good reasons to focus on stocks that are hiking their dividends. It's a move that keeps the yield competitive, and it's also usually a sign of fair corporate health. After all, not every company has the ability to raise its distributions.
Lets take a closer look at three of the companies that inched their payouts higher this past week.
Station Casinos (NYSE: STN) is arming its investors for those quarter slots. It is upgrading its $0.21 a share quarterly distributions to a nice round $0.25 a stub. It's good for the money: Earlier this year, the Vegas casino operator raised its profit guidance thanks to the healthy performance at its properties. Owning a casino stock is a far safer bet than gambling in a casino. Thanks to Station's generous payout, shareholders beat the house every three months.
Carlisle Group (NYSE: CSL) is another hiker. Longtime readers may remember the company as a component of our Boring Portfolio. The company manufacturers everything from roofing materials to car parts. It's not glamorous, but you won't find too many investors complaining. That kind of stability has allowed the company to raise its dividend for 29 consecutive years. This time its quarterly checks will be going from $0.23 a share to $0.25 a share.
Illinois Tool Works (NYSE: ITW) is another sleepy manufacturer that will be waking up its shareholders with meatier distributions. The company is raising its dividend by 18% to $0.33 a share. Stephen Simpson took a closer look at the company last month, pointing out its rather anemic 4% organic growth rate in the company's most recent quarter.
Psychemedics' (AMEX: PMD) dividend getting higher? OK, it's a lame joke, but since we're talking about the provider of hair testing for illegal drugs, how could I resist? The company's quarterly payout is going from $0.08 a share to a dime. The move props its yield up to 2.7%, which may give some money market funds a run for their money. Obviously there is greater risk in buying these stocks than relying on short-term fixed income investments, but there is also room for capital appreciation.
Subscribers to our Income Investor newsletter can appreciate companies that are sending more and more money to their investors. Analyst Mathew Emmert has singled out some in particular, like Pitney Bowes(NYSE: PBI) and Heinz(NYSE: HNZ), that are committed to growing their distributions.
Want to see what Mathew's liking these days? Go ahead and give his newsletter service a shot with a 30-day free trial. Who knows? Maybe the next thing that will get hiked will be your interest.
Longtime Fool contributor Rick Munarriz pays attention to yield signs. He does not own shares in any of the companies mentioned in this story. He is part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has adisclosure policy.
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RE:Motley Fool: 4 Stocks That Pay You
Great read, and I love stocks with fat dividends, and everyone loves stocks with rising dividends, however
A dvidend paying stock would have to increase the dividend at a faster pace than inflation to maintain the value of the dividend income, faster because in a rising interest rate environment the value of the dividend income decreases.
Looking for companies growing dividends is never a bad idea, I'm just giving the other side of the coin. I also think all four of those stocks are dogs, but that's just my opinion, time will tell.
Good luck and cheers [img]i/expressions/beer.gif[/img]