For investors who like dividends, the financial sector is an ideal place to uncover stocks with good payouts. According to industry tracker Dividend.com, over 1,200 listed companies in the sector provide such payouts. The finance industry also boasts an average yield above 4% -- more than double the current average of companies listed on the S&P 500 index.
In a sector so full of dividend payers, some companies this year inevitably hiked their payouts above and beyond the call of duty. Here are three such companies, notable not only for the size of their payout spikes, but also for their underlying fundamentals and the sustainability of those dividends.
Regions Financial (RF -0.48%) -- 2014 dividend raise: 67%
Despite some legacy issues from last decade's financial crisis, the banking sector's recovery remains impressive. This Southern-based regional lender is a prime example, having lifted its quarterly dividend by a muscular 67% to $0.05 per share in 2014.
While that's only a few cents in absolute terms, it indicates solid underlying fundamentals and the confidence of the Federal Reserve (which must approve all dividend raises proposed by banks that are above a certain size). Regions Financials' bottom line is well in the black, while key line items such as total assets and the level of demand deposits have shown encouraging growth over the years. Meanwhile, the bank's borrowers seem to be giving their lender fewer headaches: Net charge-offs declined from 0.6% in the third quarter of 2013 to 0.4% in the same period of 2014.
Since the dividend increase, the market has bid up Regions' stock by nearly 18%. Given Regions' improving results and the share-price-boosting impact of a dividend hike, don't be surprised to see more such increases from the bank.
KKR (KKR 0.86%) -- 2014 dividend raise: 25%
This company, in many respects the king of the private-equity sector, has been in business since 1976.
KKR has never stopped growing, and in 2014 it grew especially fast. As a result, its annual dividend rose 25% from 2013 to $2.03 per share. At the most recent stock price, that translates out to a lofty yield of 8.8%.
This year has seen KKR close a variety of deals around the globe. These include 50% stakes in South Korea's Oriental Brewery (bought for $1.8 billion and sold for $5.8 billion) and U.S.-based stock photo service Fotolia (KKR paid $150 million for its chunk of the company, which was sold earlier this month to Adobe Systems for a total of $800 million).
This wheeling and dealing has led KKR's investment income to rise 8% year over year for the first nine months of 2014 and its bottom line to rise 16%.
That looks set to continue, as KKR has a dizzying number of stakes in a host of companies occupying nearly every business sector imaginable. Some of these -- e.g., Nielsen Holdings, GoDaddy, and others -- are quite well known, and they should keep that income flowing in.
Chubb (NYSE: CB) -- 2014 dividend raise: 14%
Here's one for the more conservative income investors in the audience. Insurance isn't the hottest or most thrilling segment in finance. As opposed to swashbuckling private-equity players, insurers tend to be relatively quiet, modest, and steady moneymakers.
Chubb is one of those low-key operators, which means it makes a profit consistently -- and it's happy to share. In 2014, the company brought in enough to crank up its quarterly dividend by 14% to $0.50 at the beginning of this year. It's the latest of many hikes at Chubb. After all, Chubb is a Dividend Aristocrat -- one of the few publicly traded companies that have increased their payouts every year for at least a quarter-century.
There's every reason to believe Chubb will remain a member of that elite club. Third-quarter net profit saw a 10% lift on a year-over-year basis (to nearly $600 million), while net written premiums advanced by 5%. This momentum is apparently set to continue: In October the insurer raised its forecast for full-year earnings to $7.35 to $7.45 per share, well above its original projection of $6.75 to $6.95.