Earlier this month, The Associated Press reported that large companies are increasing their dividends by amounts previously unseen in history. Simultaneously, an analyst unveiled that S&P 500 companies are holding a record $940 billion in cash.
I'm currently positioning my portfolio to profit from this unprecedented event, and in the next four minutes, I will show you how to do the same. Get ready to do something extraordinary.
What's at stake?
$16.6 billion! That's the amount S&P analyst Howard Silverblatt is reporting S&P 500 companies are increasing their dividends. That's spread across 117 different companies. Today, I'm revealing my five favorites of the group and also sharing with you how to get free access to 13 more outstanding dividend payers identified by The Motley Fool's expert analysts.
The dividend bonanza of 2011
I won't waste your valuable time with a long-winded explanation of why dividend growth is important. Just know that by buying stocks with a consistent history of increasing dividends, you position yourself for increasingly massive payouts in the future. As a quick example, if you buy a stock that pays a dividend of 2.5%, and it increases its payout by a compounded 20% per year, you'd have an whopping 15.5% yield on your original investment in a mere 10 years.
Imagine getting a 20% raise each and every year. That's a life-changing payout that I'm planning to take part in; by the end of this article you should do the same.
The absolute best dividend growers
In order to find the best fast-growing dividend payers, I carefully sorted through the companies announcing sizable dividend hikes and handpicked five that best met these qualifications:
- I believe in the long-term viability of the business.
- Announced a substantial dividend increase this year.
- Long history of sustainably increasing dividends.
Deep consumer value
The first two companies turbo-charging their dividends are discounters TJX Cos.
With dividend boosts of 27% and 38%, respectively, these companies are indicating that they're more than happy for shareholders to own their shares through the 2011 dividend bonanza. And none of this is new for either of these companies. They've both increased their dividends year after year since the mid-90s. Talk about consistency you and I can rely on!
The venerable retail legend
Next is a retailer we've all known about for years. The stock has underperformed the S&P over the past 10 years but has continued to boost its dividend at a compounded 17% per year. And this year it's accelerating that increase -- to shareholders' benefit. I'm talking about Wal-Mart
I'm willing to give Wal-Mart time to get its local and international act together. All the while, I'll be profiting from its ever-higher dividend.
A unique dividend play
Next is Hasbro
Tech and dividends -- a winning combination
My last pick of the five is a mobile device play recommended to me by Motley Fool's Rising Tech Star, Eric Bleeker. Tech companies are well-known cash hoarders, though networking giant Cisco
Instead of waiting for other tech giants to begin returning cash to shareholders, I'm tapping Qualcomm
Here's a quick summary of the companies I've mentioned, but feel free to skip to below the table.
5-Year Dividend CAGR
Percentage Dividend Increase Announced
Source: Capital IQ, a division of Standard & Poor's.
Some of those current yields may not impress you, but I urge you to compare the high-velocity nature of their dividends next to others in the market. For 13 fantastic comparison companies, keep reading below.
Don't delay! Stake your claim -- here's how
With almost $17 billion in new dividends coming onto the market, now is the perfect time to claim your share of the combined $940 billion in cash S&P 500 companies are sitting on. By looking to the companies that are aggressively hiking their dividends and have a long history of doing so, you set yourself up for success now and over the next few decades.
Start reaping the benefits today. Consider the five tickers above along with the 13 names from a highly regarded free report from Motley Fool's expert analysts called "13 High-Yielding Stocks to Buy Today," including one named by our senior retail analyst as "the one dividend stock for the rest of your life." Hundreds of thousands of your fellow investors have requested access to this report, and today I invite you to download it at no cost to you. To get instant access to the names of these 13 high yielders, simply click here -- it's 100% free.
Jeremy Phillips owns shares in Hasbro and Wal-Mart.
Wal-Mart is a choice of Motley Fool Inside Value, Global Gains, and Income Investor. Motley Fool Options has recommended a diagonal call position on Wal-Mart. Hasbro is a Motley Fool Stock Advisor and Income Investor pick. The Fool has created a bull call spread position on Cisco Systems and owns shares of Wal-Mart and Qualcomm. Motley Fool Alpha LLC owns shares of Cisco Systems. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.