Dividends have given cash-starved investors the income they need as well as some security from the prospects of a downturn in the stock market. Those positive characteristics have attracted more investors than ever to stocks that regularly pay out dividends to their shareholders.
One of the most encouraging signs of a healthy stock market has been how many stocks have been able to increase their dividends substantially. In just the past year, several stocks have doubled their dividend payouts. Let's take a look at some of them.
Mosaic (MOS -0.10%): quarterly dividend up 400% in the past year
This fertilizer company has actually made two dividend increases in the past year, raising its quarterly dividend from $0.05 per share to $0.125 last May and then to $0.25 in July. Over the past several years, Mosaic has benefited from strong conditions in the farming industry generally, although more recently, challenges from more favorably priced nitrogen-based fertilizers has held back its growth somewhat. Yet with its dividend boosts over the past year, Mosaic has signaled that it sees a new upturn for its potash and phosphate fertilizer production, and shares have done better in response.
Cisco Systems (CSCO -0.50%): up 113%
Networking giant Cisco has also been a serial dividend raiser, with increases last October and just this month boosting its quarterly per-share payout from $0.08 to $0.17. Like many big tech stocks, Cisco has had its leadership challenged by competitors focusing on newer technologies, and the company has struggled to defend its turf and continue to grow. But with billions of dollars in free cash flow, Cisco has plenty of income from its core businesses to pay more to shareholders, and with its yield above 3%, Cisco now entices a new group of income-seeking investors to support its stock.
Southwest Airlines (LUV -0.84%): up 100%
Southwest doubled its dividend last June, but dividend investors shouldn't get too excited about it. The move only raised Southwest's puny payout by half a penny, and the dividend yield on the stock is just 0.3%. Still, with other major airlines being too stingy to pay dividends at all, even Southwest's token payout reveals its long history of stable profitability even in the face of massive bankruptcies and reorganizations elsewhere in the industry.
Reliance Steel & Aluminum (RS -0.52%): up 100%
The steel industry has been struggling lately, so it's especially remarkable to see Reliance Steel having made not one but two dividend increases in the past year. With increases from $0.15 per share last May to $0.25 in August and then to $0.30 in March, Reliance is bucking the negative trends in steel. What's especially noteworthy is that the company raised its payout even after announcing more than a $750 million deal to buy Metals USA in February -- a move that might have led other companies to rein in its payouts.
Starwood Hotels & Resorts (NYSE: HOT): up 150%
Unlike most companies, Starwood makes dividend payments only once a year, but its end-of-2012 payout of $1.25 per share was far above the $0.50 it paid in 2011. Even with its international exposure leaving it facing headwinds in troubled areas such as Europe, recovering prospects in its key U.S. market and expansion into growth markets around the world have led to strong performance for Starwood, and sharing the wealth with shareholders shows that Starwood expects the good times to continue.
More doubles to come?
As long as the economy remains healthy for corporations, you can expect more stocks to keep raising their dividends. But companies that double their dividends will remain rare, so be sure to keep an eye on these stocks to see how their aggressive dividend increases reward their shareholders both now and well into the future.
