In the best combination of tobacco 'n' food news since Homer Simpson's tomacco, today AltriaGroup (NYSE: MO) and its cheesy stepchild Kraft (NYSE: KFT) both upped their dividends. No, this isn't earth-shattering news. The August uptick has become a bit of an annual affair for Altria, and it's expected. This year's 7.4% increase turns out to be better than last year's. The $0.73 per share per quarter comes to $2.92 each year. At today's prices, that's a very nice 6% yield.
Food manufacturer Kraft increased its dividend by 14% to nearly $0.20 per share. The yield now comes to 2.6%; not nearly as tasty, but better than bupkis.
Although dividend stocks have enjoyed a bit of retro chic over the past few years, you suspect that many investors still look on any stock that pays out as a stodgy issue, fit only for dodgy old aunts who keep too many cats and smell like a hallway in a hospital.
Remember what happened at ARM Holdings (Nasdaq: ARMHY) when it announced a dividend? The talking heads screamed about the dividend as evidence that the former tech darling was now over the hill, like Microsoft (Nasdaq: MSFT). When the financial media jump to the conclusion that shareholder payouts are bad, we must be living in bizarre world.
Just a guess, but leaders such as those two have plenty of profitable times ahead of them. And when companies produce copious free cash flow -- such as Altria's $8 billion last year or Kraft's $2.9 billion -- there's nothing wrong with getting paid to invest while waiting for growth and capital appreciation. In fact, you should expect it. Keep in mind, upwards of 40% of the S&P 500's historical return is owed to dividends.
Our own dividend diva Mathew Emmert, whose Income Investor celebrates its one-year anniversary today, has pegged several market beaters such as Annaly Mortgage (NYSE: NLY), with its 11.6% yield, and AmSouth Bancorp (NYSE: ASO), up 23%, on his way to outperforming the S&P by more than 6%.
All this verbiage comes to this: Sometimes the best investing ideas are exactly the kinds of boring, everyday companies that no longer take part in the Street's weekly popularity contests. When they'll pay you well to hold them, your portfolio will probably thank you. It's one way to try to make millions slowly.
For more Foolishness on dividends:
Seth Jayson could use more dividend payers in his portfolios, but he has no position in any company mentioned... yet. View his Fool profile here.
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