6 Companies Increasing Dividends

Defense, software and fast food top list of payout performers

It was another week of big losses on Wall Street, as the Federal Reserve’s “Operation Twist” failed to get the bulls dancing. Traders were let down by the lack of any new form of quantitative easing from Chairman Ben Bernanke and his team. More importantly, the Fed basically said the economy was headed toward recession, and that fear of recession prompted major selling throughout global markets after the Federal Open Market Committee meeting.

Yet even as Wall Street focused on the Fed, Main Street got a nice dose of increased dividends from several of its most widely held stocks. Big defense, big software and big fast food topped this week’s list of payout performers, and the move by these and other stalwart firms proves that despite the latest selloff, income-focused investors continue ringing the register in the following six stocks.

Covidien

Diversified medical device and pharmaceutical firm Covidien (NYSE:COV) issued a winning prescription to shareholders, raising its quarterly dividend by 12.5%. The new payout of 22.5 cents from 20 cents is payable Nov. 4 to shareholders of record as of Oct. 13. The new dividend yield, based on the closing value of $44.77 on Sept. 22 (the day the dividend was announced), is 2.01%. Last month, Covidien announced a new $2 billion share repurchase program, which the company says underscores its commitment to balance cash return to shareholders with reinvestment in the business.

Fifth Third Bancorp

Regional bank Fifth Third Bancorp (NASDAQ:FITB) raised its quarterly dividend by 33% to eight cents per share from the previous quarter’s six cents. The payout boost was the second increase this year by Fifth Third, which earlier this year repaid its $3.4 billion in taxpayer-funded TARP bailout assistance. The enhanced dividend is payable on Oct. 20 to shareholders of record as of Sept. 30. The new dividend yield, based on the Sept. 20 closing price of $10.38, is 3.08%.

Host Hotels & Resorts

Lodging real estate investment trust Host Hotels & Resorts (NYSE:HST) is one of the largest owners of luxury and upscale hotel properties, and this week the company lavished more dividends on its shareholding occupants. The company raised its quarterly dividend to four cents a share from the previous payout of just one penny per share. The plush new dividend is payable on Oct. 17 to shareholders of record on Sept. 30. The new dividend yield, based on the Sept. 19 closing price of $11.65, is 1.37%.

Lockheed Martin

Defense giant Lockheed Martin (NYSE:LMT) makes such high-tech weaponry as the F-22 stealth fighter, but there’s nothing stealthy about the company’s move to raise its quarterly dividend. Lockheed lifted its payout to $1 per share from the previous payout of 75 cents per share. The dividend is payable Dec. 30 to shareholders of record as of Dec. 1. The new dividend yield, based on the Sept. 22 closing stock price of $73.14, is 5.47%. In addition to the bigger quarterly payout, the company also announced a repurchase program of up to $2.5 billion in common stock.

McDonald’s

Fast food giant and Dow component McDonald’s (NYSE:MCD) increased the portions on its quarterly dividend by 15%, upping its payout to 70 cents per share from 60 cents. CEO Jim Skinner said the company will return $6 billion to shareholders in 2011 through a combination of dividends and share repurchases. The world’s largest fast-food chain says the new dividend will be paid on Dec. 15 to shareholders of record as of Dec. 1. The new dividend yield, based on the Sept. 22 closing price of $85.99, is 3.26%. McDonald’s has boosted its quarterly dividend every year since 1976.

Microsoft

Software behemoth and Dow component Microsoft (NASDAQ:MSFT) updated its quarterly dividend, increasing its payout by 25%. The new dividend of 20 cents per share is payable Dec. 8 to shareholders of record on Nov. 17. The new dividend yield, based on the Sept. 20 closing price of $26.98, is 2.97%. The current increase follows last year’s payout hike of 23%. But despite the bigger dividend, many on Wall Street think the dividend is paltry compared to Microsoft’s $53 billion in cash and short-term investments.

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