According to the U.S. Labor Department, the cost of employing a worker in the United States -- your salary and benefits -- grew at the slowest pace on record in 2009, a mere 1.5%. That's an absurdly low increase, especially for those of us whose state, local, or other taxes and other costs of living (which don't count in the inflation numbers) rose significantly.
With unemployment still hovering near 10%, and the total un- and underemployment rate around 16.5%, there's little hope for a reversal of that trend anytime soon. In other words, you didn't see a big raise in your salary last year, and you likely won't see one this year, either.
Another way to get a raise
Although salaries are barely budging, one form of income has a legitimate shot of rising this year: dividends. Many companies were able to raise their dividends within the last year, and most look capable of keeping up the trend. By buying shares in those companies, you can watch your invested capital earn you the sort of raises your salary just isn't giving you these days.
Here are just a few that look like they're able to deliver on that potential:
|
Company |
Dividend |
Payout |
Dividend Growth (YOY) |
Net Income |
Cash From Operations
|
|---|---|---|---|---|---|
|
Wal-Mart |
2.0% |
29.4% |
14.7% |
$14,335 |
$26,249 |
|
PepsiCo |
2.9% |
45.9% |
7.6% |
$5,946 |
$6,796 |
|
United Technologies |
2.5% |
35.4% |
14.5% |
$3,829 |
$5,353 |
|
Honeywell |
3.0% |
42.6% |
10.0% |
$2,153 |
$3,946 |
|
General Mills |
2.7% |
36.6% |
9.1% |
$1,634 |
$2,452 |
|
Norfolk Southern |
2.7% |
48.4% |
11.5% |
$1,034 |
$1,860 |
|
SYSCO |
3.5% |
49.9% |
11.4% |
$1,136 |
$1,165 |
Data from Capital IQ, a division of Standard & Poor's. YOY = year over year.
What makes them special?
With payout ratios below 50% of net income, the companies held onto enough of their earnings to reinvest in their businesses' growth, even while handing their owners decent payments. The fact that their cash from operations is stronger than that net income level indicates that their businesses are really generating the cold, hard cash needed to cover those dividends.
And most importantly, with positive year-over-year dividend growth, they've actively proven their willingness to hand their owners those raises. That's more cold, hard cash in their hands -- and in yours, if you're willing to do nothing more than simply buy stock in such companies. As always in investing, the past is no guarantee of future performance, but by owning businesses with solid and shareholder-friendly profiles like that, your chance of success seems pretty strong.
Buy the best
At Motley Fool Income Investor, we're only interested in owning companies that treat their owners well. The ones we target have solid, well-covered, and when possible, growing dividends. After all, only they have both the proven track record of rewarding you today, and the strong likelihood of continuing to do so well into the future.
In today's job market, your investments may well provide your only real chance of significant income growth. If you're ready to see the sort of raises you can only dream of seeing from your boss these days, then join us at Income Investor today.
If you'd rather first see which companies have already passed our stringent review, click here to start your 30-day free trial. There's no obligation, and while you're looking around, you'll have full access to everything we have to offer.
At the time of publication, Fool contributor Chuck Saletta owned shares of SYSCO. PepsiCo and SYSCO are Income Investor selections. SYSCO and Wal-Mart are Motley Fool Inside Value picks. The Fool owns shares of SYSCO and has a disclosure policy.
