Saturday, June 26, 2010

High Yield Dividend Stocks - 5 Income Investments Boosting Their Yields

DividendeHigh Yeld Dividend stocks are still crucial to investors in June, despite mild improvements in the stock market after May’s volatility. Investors are focused on stocks raising dividends and boosting dividend yields as a way to limit their risk. The guarantee of a dividend payout – particularly one that is a high yield – is crucial to protecting your retirement money right now.
If you’re unfamiliar with the term “dividend yeld,” think of it as the amount of money you will be paid back for your investment in a company based on annual dividends. For instance, if you buy a stock for $10 and it pays a 25 cent dividend every quarter, it has an annual dividend of $1 and a dividend yield of 10%. That’s because the $1 you get paid represents 10% of the share price for that particular dividend stock.
Because dividend yields are based on share prices, they change slightly day to day. But perhaps the most dramatic changes in dividend yeld occur when a company boosts its quarterly payout – thus boosting the percentage of its share price you get back via dividend payouts.
Here are five stocks from the last week that just raised dividends, and thus boosted their dividend yields:

Best Buy Dividend Increase

Best Buy Co. (BBY) announced today that it will boost its quarterly dividend by 7% to 15 cents a share, up a penny from the previous dividend payout of 14 cents. Best Buy doesn’t have a particularly high dividend yieldright now with its 60 cent annual dividend representing only about 1.6% of current BBY stock pricing. But the increase in the dividend certainly sweetens the appeal of Best Buy for investors.
The No. 1 U.S. electronics retailer, Best Buy said the new dividend will be payable on Oct. 26 for shareholders of record on Oct. 5. BBY stock has suffered so far in 2010, down about 10% year to date, but this dividend increase may give investors incentive to buy in now and bank on a recovery.

PetSmart Dividend Increase

On Monday June 21, PetSmart Inc. (PETM) raised its quarterly dividend 25% to 12.5 cents a share from 10 cents a share previously – just one year after the nation's largest pet products retailer tripled its quarterly dividend. Like Best Buy, PETM stock doesn’t have a very high dividend yield with its 50 cent annual payout equating to about 1.6% of current share valuation. But this rapid increase in PetSmart’s dividend is worth taking note of. Additionally, PetSmart authorized a new $400 million share-repurchase program.
Bullish MarketLast month, PetSmart reported strong earnings as its fiscal first-quarter earnings climbed a bigger-than-expected 20% on stronger sales. PETM raised its profit guidance for the year as a result of strong earnings. The only downside is that the ex-dividend date has passed for this larger quarterly payout, but you can still buy in to PETM stock with anticipation of the next dividend. Shares are up +15% so far in 2010 compared to a small slide in the broader market, so there may be added benefits to PETM stock ownership beyond just the dividend.

Duke Energy Dividend Increase

Duke Energy Corporation (DUK) is a high yield dividend stock that has long been a staple of income investors. As a utility company, it has a very reliable revenue stream and thus can afford to give its profits back in the form of big dividends. The long history of payouts continues as Duke announced Wednesday June 23 that it will increase its by half a penny to 24.5 cents per share.
Doesn’t sound like a big dividend increase, does it? Well the total is much more important than the increase since the 98 cent annual dividend gives Duke a whopping 6% yield at current valuations. That’s a high dividend yield investors can take to the bank in these troubled times.
Also good news to new investors: The dividend is payable on September 16 to shareholders of record at the close of business on August 13,  so there’s time to buy in before the increase. What’s more, you can probably expect great dividend payments for the life of your investment considering that this is the 84th consecutive year that Duke Energy has paid a quarterly cash dividend on its common stock. 

Darden Restaurants Dividend Increase

Darden Restaurants Inc. (DRI) reported disappointing earnings on Wednesday, saying  that its fiscal fourth-quarter EPSs slipped amid continued dampened consumer spending. But on the plus side, Darden announced a dividend for the quarter of 32 cents a share, up from 25 cents previously, and boosting DRI dividend yield to about 3%.
Darden has had a tough go of it in the recession as diners look to cut back spending and are eating out less. But after a very sluggish 2009, shares have bounced back +13% year-to-date -- considerably better than the broader market – and could be showing signs of life. If earnings start to turn around, the company could have a lot of room to run in 2010.
Regardless, this increase to Darden’s dividend yield will help investors stick with the restaurant stock in the short term. DRI just payed a dividend on May 2 so you have to wait a few months to get paid again, but the boost in yield is good none the less.

Bull GreenPeoples Financial Corporation

Don’t think it’s only the big stocks that have free cash to share via dividends. Peoples Financial Corporation (PFBX), a small bank that services individuals and small businesses in Mississippi, just announced a 10% boost to its semiannual dividend.
Specifically, Peoples Financial Corporation declared a regular semiannual cash dividend of 11 cents a share, up a penny over the 10 cents the previous dividend yield was based on. That means PFBX shares now yield about 1.8% a share. The dividend only comes twice a year, but tis one is payable July 16 to stockholders of record July 9 so there’s still time to share in the dividend.
Surprisingly, despite having a market cap of just $60 million and average daily volume of less than 7,000 shares, Peoples Financial had increased its dividend 11 consecutive times until July 2009, when the financial crisis forced reductions in dividend yield.

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