Sophisticated income investors know that it's not just a stock's current dividend yield that matters, but also its ability to increase its cash payout. Companies that can steadily raise their dividend are typically rewarded for doing so by the market, resulting in handsome gains for their investors.
Here are three businesses that boosted their cash returns to shareholders in recent days.
The cannabis industry's landlord
Innovative Industrial Properties (IIPR 0.85%) boosted its quarterly dividend 28% sequentially and 186% year over year, to $1.00 per share, on Dec. 10. That places its stock's current annualized yield at 5.3%.
Innovative Industrial Properties is a real estate investment trust (REIT) focused on the cannabis industry. It acquires facilities that can be used to produce medical marijuana and leases them to state-licensed growers in the U.S. Oftentimes, IIP purchases the real estate directly from cannabis producers and leases the properties back to them. In this way, IIP serves as a valuable resource of capital to these companies at a time when many marijuana businesses are finding it difficult to obtain financing from the traditional banking industry.
As a REIT, IIP passes nearly all of its profits on to investors via its rapidly growing dividend. And with more states expected to legalize marijuana in the coming years -- thereby creating more demand for new cannabis production facilities -- IIP's shareholders can expect their cash payouts to continue to grow.
PulteGroup (PHM -0.98%) raised its quarterly dividend by 9% sequentially and 33% year over year, to $0.12 per share, on Dec. 5. The homebuilder's shares now yield 1.2%.
Strong economic growth, rising wages, and low mortgage rates are all helping to fuel the growth of the massive U.S. housing market. As one of the largest homebuilding companies in America, PulteGroup is well-positioned to profit from rising demand for new homes.
Low housing inventory levels should result in a substantial need for new homes in the coming years. Additionally, higher price limits for government-secured home loans could help to make purchasing a home more affordable for more people, particularly in higher-price markets. Both of these trends bode well for continued dividend growth for PulteGroup.
The telecom titan
AT&T (T 2.31%) increased its quarterly cash payout by a rather pedestrian 2%, to $0.52 per share, on Dec. 13. Its current 5.4% yield and 36-year streak of annual dividend increases, however, are anything but ordinary.
AT&T recently unveiled a new three-year financial plan. The telecommunications giant intends to use its bountiful free cash flow and funds raised from non-core asset sales to aggressively pay down the debt it incurred from its blockbuster $110 billion acquisition of Time Warner.
In addition to shoring up its balance sheet, AT&T's financial plan also includes earnings and cash flow growth targets that should allow it to extend its dividend growth streak well into the next decade.