As has become a quarterly tradition around here, I like to look back at a few special companies following the end of every quarter and give credit to those that have kept shareholder interests in the forefront.
As fellow Fool Morgan Housel has pointed out, the overall payout ratio of the S&P 500 is at a record-low 29%, raising the question, "When are companies going to return some of their earnings to shareholders?" We continue to see no shortage of companies raising their dividends, with a total of 1,953 reported dividend increases in 2011 -- 13% higher than in 2010. But even with the total dollar value of increases almost doubling 2010's figure, companies are still keeping a lot of profits in corporate coffers, following a few tumultuous years for businesses and investors.
Today, I plan to highlight five companies that gave shareholders a nice gift under the Christmas tree and look poised to continue to reward investors over the long haul.
Don't be confused into thinking that a company needs to yield 10% to have income-seeking potential written all over it. Silver Wheaton recently tied its dividend payment to its quarterly operating cash flow, which will give shareholders a significant boost in their quarterly payout. In November, Silver Wheaton announced a tripling in its quarterly dividend from $0.03 to $0.09. More interestingly, this move comes on the heels of silver being roughly 40% off its highs.
The thing to remember with Silver Wheaton is that its contracts to resell silver lock it in at a very low price -- just over $4 per ounce. This means that as long as silver remains north of this number, everything else above that level is pure profit. This is a company that's going to be raking in the dough for years to come, and shareholders are likely to be rewarded with even healthier payouts in the coming years.
Are those mouse ears or a halo in disguise? Mickey Mouse and the Disney gang delivered big time for investors in 2011. Disney announced the largest dividend increase in its history, 50% in November, as the company experienced a boon in growth across all sectors. Boosting its annual payout to $0.60 from $0.40, Disney saw an unexpected 11% jump in sales from its theme parks in the third quarter and incredible strength in its ABC and ESPN networks. More importantly, Disney secured a contract with the NFL to broadcast its games through 2021 -- an important step considering football is the most-watched sport in the U.S. Record revenue and profits in 2011 also translated into $5 billion worth of share buybacks. Disney is striking all the right chords with shareholders right now, and I see no sign of that changing in 2012.
As amazing as it may seem, Amgen is sticking to its word to return at least 60% of its earnings to investors. The world's largest biotech company pumped its quarterly dividend up by 28.6% to $0.36 from $0.28 and will now yield north of 2%.
This is pretty impressive considering that Amgen became the first biotech to offer a dividend, and the company was returning nothing to investors just two years ago. What drives Amgen's dividend is the consistency in its business, which saw sales increase by 3% in the third quarter, and its commitment to driving growth in shareholder equity. Amgen repurchased 45 million shares in the third quarter alone and authorized an increase in its share repurchasing program of up to $10 billion. Amgen's commitment to its investors is much stronger than many companies', which easily lands it among my top dividend performers in the fourth quarter.
VF should be familiar to those who followed my Best CEOs of 2011 two-part series. CEO Eric Wiseman has done a masterful job of leading the company. 2011 marked another year of record profits, with its most recent quarter highlighting a 23% jump in revenue with growth recorded across all business segments -- including its recently purchased Timberland brand.
But the best part of 2011 was the rapid growth in VF's quarterly payout. In October, VF boosted its quarterly payout to $0.72 from $0.64, marking its 39th consecutive year of raising its dividend. This dividend has grown by an astounding 148% since March 2006. With the company forecasting organic growth of 13.5% for the remainder of its fiscal year, I don't see any reason to expect anything but continued success from VF.
Alliance Resource Partners
You thought I could get through an entire list of top dividend companies for a quarter without including Alliance Resource Partners? As if! The company, whose CEO Joseph Craft also made my list of Top CEOs in 2011, has possibly the most immaculate record of increasing dividends that I've witnessed in the past few years. Rather than announcing yearly dividend hikes, Alliance Resource has boosted its payout for 14 straight quarters!
The best part is investors don't need to cross their fingers and pray that its coal operations remain strong. 2011 is on pace to be the company's 11th straight year of record profits and will boast the highest operating margins ever. Check out this rapid dividend growth and I dare you to find a more consistent performer:
With no shortage of companies paying dividends, but a real lack of quality dividends being paid, it pays to take notice when companies like these five make a stand to put shareholders first. These five companies look poised to continue their strong performance well into 2012 and beyond, which is likely to translate into higher yields and a better night's sleep for many of their shareholders.
Which companies not mentioned here deserve kudos for increasing their quarterly payout in the fourth quarter? Share your thoughts in the comments section below and consider adding these five distribution dynamos to your free and personalized watchlist:
- Add Silver Wheaton to your watchlist.
- Add Disney to your watchlist.
- Add Amgen to your watchlist.
- Add VF to your watchlist.
- Add Alliance Resource Partners to your watchlist.
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