June's 5 Dividend Dynamos

As promised, this will be the year that I finally pay myself. As such, I'm always on the lookout for companies that are putting shareholders first. In 2011, we witnessed 1,953 dividend increases. Yet as Fool contributor Morgan Housel has pointed out, the overall payout ratio of the S&P 500 recently hit a record-low 29%. This means it isn't enough just to find a dividend; it's about finding a growing and sustainable dividend.

After perusing some of June's finest, I've settled on five companies that I feel went beyond the call of duty to provide for their shareholders last month by increasing their payout or initiating a dividend payment.

Source: Company press releases. NM = not meaningful. *Agrium pays dividends semi-annually.

Agrium
Many analysts had conjectured that a record year of crop production in 2011 meant we'd seen a top in potash and phosphate prices and that producers of these key nutrients would languish through a rough patch in the near term. Well, folks, Agrium scoffs at these analysts and is rubbing its potash right in their faces with a sizable dividend boost for shareholders.

In a matter of one week, Agrium announced a 122% increase to its semi-annual dividend, while also updating its first-half outlook, which came in generally positive. The key points from the company's update were that nitrogen and potash prices are higher while phosphate prices are expected to dip. Agrium also noted that warmer weather in the U.S. allowed growers to begin planting sooner than usual, increasing demand for Agrium's nutrients. Most importantly, Agrium feels comfortable with its original earnings guidance, which is a great sign for the potash sector and an even better sign that management has good visibility of where demand is headed.

Agrium's new payout pushes its yield slightly over 1%, with its payout ratio moving from just 3% to 10%. Keep in mind that this payout ratio is still very low and gives the company ample room to boost this dividend considerably higher as long as phosphate prices remain steady and potash prices remain high. Apparently crops aren't the only things growing like weeds around these parts:

Source: Dividata, *Assumes $0.50 semi-annual payout.

Target
With Wal-Mart seemingly back on track in the U.S., the pressure is on Target once again to step up its game and attract shoppers back into its stores. Admittedly, the past few quarters haven't been pretty from an expectations standpoint as Target's Canadian expansion has increased expenses, but Target continues to be right on the money when it comes to rewarding its shareholders and implementing initiatives to drive growth in the states.

Two recent initiatives that do seem to be working are Target's expanded grocery selection and discounts related to REDcard and debit-card usage. Target took a page right out of Wal-Mart's book and stepped up its grocery selection, lowering its margins but upping consumer convenience. The company is also working on improving customer loyalty by offering discounts to those who use its in-store REDcard, or use debit cards, which have much smaller fees attached to them than credit cards.

These new initiatives boil down to Target being able to boost its quarterly payout to shareholders by 20% to $0.36. Target's new yield of 2.5% gives it a marginal edge over Wal-Mart's 2.3%, and its payout ratio of 33% (based on analysts' estimates for 2012) gives the company room to push that payout higher over time. Target's results may not be perfect lately, but its 45-year streak of increasing its payout continues to hit the bull's-eye:

Source: Dividata. *Assumes quarterly payout of $0.36.

UnitedHealth Group
You might think, with the uncertainty of President Obama's health-care reform bill hanging over the health-care sector through much of June, that most companies would be tightening their wallets and preparing for sweeping change. Luckily for shareholders of UnitedHealth Group, that's just not how it operates.

Just weeks before the Supreme Court decision upholding the constitutionality of Obamacare, UnitedHealth boosted its dividend by 31% and announced its intention to repurchase 110 million shares. The new buyback program replaced UnitedHealth's existing program, which had 33 million shares remaining, and gives the health-plan providers' shareholders something to fall back on as we prepare to head into unchartered territory.

Also working in UnitedHealth's favor is its relatively small exposure to small group and individual business for revenue, unlike WellPoint, which relies heavily on this group. With new mandates set to go into effect in 2014 requiring 80% of premiums collected to be spent on medical care, WellPoint's administrative spending could be cramped, while UnitedHealth is already way ahead of its peers.

UnitedHealth's new yield of 1.4% isn't jaw-dropping, nor is its projected payout ratio of 17% in fiscal 2012, but considering the uncertainty surrounding the soon-to-be implemented changes among health-care providers, it's a welcome sign for shareholders and is certain to turn a few frowns upside down:

Source: Dividata. *Assumes quarterly payout of $0.2125; UnitedHealth paid a dividend only once a year from 1990 through 2009, then switched to a quarterly payout in 2010.

Walgreen
Walgreen has been an absolute payout-increasing machine in recent years! Taking into consideration shareholders' disapproval for its contract dispute with Express Scripts, which cost it millions of customers, and its recent $6.7 billion partnership with Alliance Boots, those increasing dividends might be the only thing keeping shareholders content.

Walgreen's management is doing everything it can to smooth the transition away from its Express Scripts partnership, and despite the backlash, I see decent growth opportunities from its partnership with Alliance Boots. The key points of the deal, other than Walgreen's becoming the world's first health-driven pharmacy and well-being retailer, is that the deal will cut costs and add to earnings immediately.

But when all is said and done, it's Walgreen's impeccable dividend growth that keeps shareholders coming back for more. Walgreen has boosted its dividend by double digits in each year since 2003 and boasts an average annual dividend growth rate of 21.3% over the past decade. Feel free to hate on Walgreen all you'd like, but understand that its projected payout ratio of 42% for 2012 still leaves moderate room for future payout increases and its current yield of 3.8% stands head-and-shoulders above its peers:

Source: Dividata. *Assumes quarterly payout of $0.275.

Dell
Get your cameras and snap your pictures, because this might be the only time Dell has ever been in my good graces.

Dell's personal computer and laptop businesses have struggled to adapt to consumers' demands for smaller, lighter, and more portable Internet and cloud-capable devices. Some consumers who would have gone to Dell in the past now are marching into Apple stores to purchase a tablet or MacBook.

In response to this trend, Dell has taken to purchasing high-margin businesses in the storage, security, and infrastructure space in order to invigorate its once-dominant business. Unlike Research In Motion, which is sinking faster than the Titanic, Dell can survive on its PC and laptop business for quite some time and will still generate solid operating cash flow from those business segments. That didn't stop Dell from announcing plans to cut operating expenses by $2 billion over the next three years.

All of these savings compounded with relatively strong cash flow amount to Dell's first-ever dividend of $0.08 per quarter. The new yield of 2.6% is pretty appealing for income seekers and could open Dell up to a group of institutional investors that had avoided the stock up until now. In addition, Dell has been aggressively repurchasing its own stock, reducing its outstanding share total by 14% in just four years.

Dell may not be the same growth story it once was, but for the first time since going public it appears it finally has shareholders' best interests in mind.

Foolish roundup
Finding great dividends is all about value, growth, and sustainability, and these five companies definitely exhibited that in June. Consider using the links below to add these names to your free and personalized watchlist so you can keep track of the latest news on each company.

Also, if you'd like access to even more dividend-paying stocks, you should obtain a copy of our special report "Secure Your Future With 9 Rock-Solid Dividend Stocks." As the name implies, we're going to give you access to some of the best dividend companies in the world, and best of all, this report is completely free, so don't miss out!

• Add Agrium to My Watchlist.
• Add Target to My Watchlist.
• Add UnitedHealth Group to My Watchlist.
• Add Walgreen to My Watchlist.
• Add Dell to My Watchlist.