With the exception of banks, we've been seeing a bunch of nice dividend increases again this year. J&J's recent 10% advance was recently discussed here, as was ExxonMobil's 14% increase.

Here some more hikes, YTD for 2008...

• P&G: 14%
• Colgate-Palmolive: 11%
• Kimberly-Clark: 9% 
• Pepsi: 13%
• Coke: 11%
• Harley Davidson: 10%
• Wal-Mart: 8%
• ProLogis: 12%
• Exxex Property: 9%
• SL Green: 12%
• Weingarten Realty: 6%
• American Express: 20%
• Abbott Labs: 10%
• ConocoPhillips: 14%
• Vulcan Materials: 6%
• Allstate: 7%
• Aflac: 17%
• Boeing: 14%
• Sysco: 15%
• FPL Group: 8%

Keep 'em coming...

Duane

You can add ACAS to that list:

<BETHESDA, Md. (AP) -- American Capital Strategies Ltd. said Tuesday its board raised its second-quarter regular dividend by 12 cents, or 13 percent, to $1.03.>

Dick

Hey, don't forget international dividends!  My HBC was up nicely this quarter.

Greg

Bill I see only two things wrong with funds holding these stocks:

1. You have to share the increases with the fund manager(Expenses).

2. How can you be sure the fund still holds the above stocks? :-).

(my first smile)

Copie

It seems like fund managers at DODBX and Wellington hold what they consider to be "undervalued" stocks (which happen to pay good dividends) until they feel they're fairly valued, then sell them.  Dividend growth doesn't seem foremost on their minds -- they collect some dividends while they're waiting for the stocks to appreciate.  I doubt either of those funds are sitting on a large pile of SO, PGN, XOM, etc. which they don't ever plan to sell, and just collect dividends on them.

Greg

Hi Copie and Greg<

I am repeating this from the long Jill Evens thread that you may not be reading any longer:

The bottom line is it is all about the payout, not how you get it.

I  surely do agree that those inclined to hold individual dividend yielding and dividend growing stocks will have lower expenses and if they can hold enough stocks to feel well diversified, then they should see good results.

Your strategy of using just the yield you need and reinvesting the rest is very sound and works with individual stocks or Mutual funds alike.

The biggest difference is I'm trading perhaps .2% per year for more diversification, and professional active management.  I have come to the conclusion that that is what works best for my temperament.

While you may hold a stock like XOM for 20 years, my managers will likely buy XOM when it is depressed, sell it when it reaches a certain target price, and then buy something else.  That doesn't seem like a very good way to grow dividends, after all they may hold the stock only 2-3 years.  The new stock they buy will have to be bought at the current dividend, which should be pretty good since they are buying it at a depressed price.

However, although the fund itself isn't seeing a great increase in payout per share, all those reinvested dividends are causing an increase in payout.  Certainly this is not equal to owning and holding the  individual stocks where the dividends are growing, because you are reinvesting both the dividends and the growth of dividends, whereas I'm only reinvesting the dividends and whatever growth there is during the holding period.

But the great equalizer is that I am also reinvesting the capital gains from all those stocks that are being sold by my managers.  My funds are averaging around 3-4% in capital gains per year.  That is 3 to 4% of the NAV per share, which is generally a lot higher than a 7-10% growth of a dividend.

So see?  We both can smile :o}

best,

Bill

Bill I agree with you 100% as we all know ind. stocks are not for everyone just like bonds are not for me! I know some people that need to stay in bank CD's.

I like your smile better so will work some more on mine!

Copie

To round out the DJIA stocks, in addition to the ones I mentioned in the base note we have...

• IBM: 25%
• Intel: 24%
• AT&T: 12%
• 3M: 4%
• Pfizer: 10%

So, by my count, among the 30 DJIA stocks we've had 12 increases, 17 maintains, and one cut (Citigroup) so far in 2008.

Duane

--------

postscript: Scott pointed out Chevron's announcement, which I hadn't included. That makes 13 of the 30 with increases in the first four months of the year.

Hey thanks, I hadn't heard about the ACAS increase.  Good news.

I hold 4 more that recently increased: 
 Chevron 12%
 Kinder Morgan 4.3%
 TEPPCO 2.2%
 Amerigas 5%

and Amerigas also announced their target dividend growth rate has been upped from 3% to 5%.  If there's anything better than dividend growth it is dividend growth growth.

:)  :)  :)

All these dividend increases show a shift in thinking and are making me nervous.  To me, they say boomers are nervous about retirement income and are looking at them for security after the stock bubble burst and as the amount and kind of dividends increase can our hungry representatives not be far behind looking for income sources?

Roberta 

Roberta, you're clearly an astute student of the market.  What's your best guess as to where dividend tax rates are headed?

It would not surprise me to see them taxed at marginal income tax rates.

Are muni's the course of last resort? :-)

Greg

Is M*'s information wrong again? They are reporting 1st qtr. dividend for ACAS was $1.01. 12 cents on top of that should make the new dividend $1.13

Am I missing something? 

Twinlabs... I am unsure of what you are asking... but I think it is confusion over the way that ACAS reports their increases.

ACAS (www.american-capital.com) paid 1.01 for first quarter; and will pay 1.03 Q2, and expect to pay 1.05, and 1.10 in Q3 and Q4, respectively.

ACAS calculates their dividend increase as year-over-year.  Thus 1.03 is a 13% increase from Q2 last year, 0.91 to 1.03, the Q1 increase was 13% increase also, 0.89 to 1.01.

Stats

IMO this market shows how dividend investings really helps to keep the ship afloat as I was looking at the share prices of my stocks over the last six months and how much lower they are now, but when I look at the dividend increases for same stocks it brings it home on how much good dividend stocks are worth. One day sometime in the future share price will catch back up and we will go again.

Pity the Cisco stock owners since they do not  have dividends, but have to sell shares to eat!

Copie

Roberta

Although the approach of income investing is still relegate to a few retirees, I'm wondering how this might change as retirees hit the streets and are told by their well trained TR investment advisors that they are beginning a downward negative savings on their life savings. That is, the quarterly (or annual) account statements will gradually decline....and this is normal and to be expected. Somehow, I imagine this is going to be a tough pill to swallow for new retirees.

One possible solution is life income from insurance products. In fact, I just looked over a URL from 'Benefits Link'  with an article (or perhaps a sales brochure) on the use of life annuities for women called 'The Female Factor' at http://www.paycheckforlife.org/uploads/ASR-white_paper_FINAL.pdf . Take a look and see what you think.

But due to the adverse psychology of reverse-savings, we may see more interest in income investing as time moves along.

BruceM

Roberta, you're clearly an astute student of the market.  What's your best guess as to where dividend tax rates are headed?

It would not surprise me to see them taxed at marginal income tax rates.

Are muni's the course of last resort? :-)

Greg

[/quote]

Greg,

I'm sorry.  I totally missed this question addressed to me.  I didn't just ignore it.  All of my planning assumes that taxes go up.  I think they promised me that SS would never be taxed.  Now my medicare insurance is being means tested.  I have benefited greatly Bush but believe it's wrong.  I'm seeing the bait and switch about taxes going on in my state with property taxes.  People are seeing the propaganda like changing the inheritance tax to death tax and buying into the fear mongering that  it applies to them  and ignoring the loss of the step up basis which applies to many more of us.

There is no such thing as a free lunch; somebody has to pay for infrastructure, education, police, etc.  There is a great deal of work going into separating us into classes and getting rid of the middle class and all that means about people being able to become anything in this country.

Before this degenerates into a political discussion - both sides lie.  Both sides use sound bites not reason.  The arguments about our health care system clearly show this.

The only thing I'm really sure of is that I'm going to be sc*wed and I do the best I can to cover all the bases.

Roberta 

Bruce,

I spent a lot of time trying to investigate both wiser and paycheck for life w/o success.  This is a sales brochure and my investigation revealed that a number of companies such as metlife and genworth use it.  You're looking at a generation, retiring now, who's real lifetime choices were essentially teaching, nursing or marriage.  The working ones had 403b's from insurance companies and their agents are now coming in and selling them new annuities.  The agents have the access and get the retirement lists.

They did include the fact that this route may run into problems with  inflation and should be for non-qualified money but it was a kind of throw away CYA.  They also pushed that this was a route for a lump sum like selling a house, a life insurance payout, an inheritance but I'll send you a box of doughnuts if this is how it's sold.

The most important aspect of the brochure, and their real hooker is:

Third, annuities preclude the need to make difficult decisions on how much to withdraw each year. Many people choose to take a sum of money, invest it on their own and take regular withdrawals. This may work for certain individuals, but it carries great risk. Some may take out too much money and then run out of funds when they are older and have few other financial resources. Conversely, others may be overly cautious and take out too little, resulting in an unnecessary drop in their standard of living. A lifetime annuity takes out some of the guesswork and worrying by guaranteeing a steady lifetime retirement income.

They also use a lot of statistics that derive from a lot of woman who lived pink collar or house cleaning or nurse's aides lives and who would not have the  assets to be purchasing such products to begin with.

Except for high net worth individuals, the advisor's best interest is in selling an annuity and the brochure gives the impression we're talking about SPIA's but they keep calling it a lifetime annuity and I'll bet another box of doughnuts that variable annuities or equity indexed annuities will be sold with their teaser of higher income possibilites with GUARANTEED benefits and in 10 years, when the back end load goes away, they'll be sold a replacement product producing a new commission.

Doing taxes this year, particularly with the supplement bringing all kinds of people who don't normally file out of the woodwork, we saw a tremendous increase in the numbers and amounts of reverse mortgages.

What did P.T. Barnum  say about one born every minute?

Roberta 

Roberta, thanks for taking the time to respond to my post. 

 
I for one think that retirees should have their dividends taxed at only 15% (or lower); 40% of people who receive LTCG's have incomdes of $50K/ year as well (that covers lots of retirees as well), so it's not as though the lower CG rates help only hedge fund managers.

You're right, infrastructure, etc. don't come free.  I just wish our tax dollars were used in the most efficient ways possible.  Higher taxes provide little incentive to work harder and longer; a CPA friend of mine (he's your senior by many years, born in the mid-1920s and still very active) tells me of the harrowing top rate taxes on returns he prepared in years gone by. 

Greg

Roberta

Good assessment.

When you capitalize 'GUARANTEED', just for giggles I went back and did a text search on the following with the number of times its mentioned:

Guaranteed - used 5 times

Security - used 27 times excluding when used in conjunction with 'Social Security'

Safety - used 4 times

What kind of surprised me is that this sales brochure didn't use the word 'protection', a popular marketing term for this kind of stuff.

BruceM

Twinlabs... I am unsure of what you are asking... but I think it is confusion over the way that ACAS reports their increases.

ACAS (www.american-capital.com) paid 1.01 for first quarter; and will pay 1.03 Q2, and expect to pay 1.05, and 1.10 in Q3 and Q4, respectively.

ACAS calculates their dividend increase as year-over-year.  Thus 1.03 is a 13% increase from Q2 last year, 0.91 to 1.03, the Q1 increase was 13% increase also, 0.89 to 1.01.

Stats

[/quote]

That's it! I misinterpreted the announcement. I thought the increase was since last quarter, not 2nd quarter of last year. Not used to seeing it published that way.

Greg,

I'm not Roberta, but since it will take an act of congress and a willing President to extend or make the current dividend tax rate permanent, I'm afraid that there is not much hope.

Roberta,

My oldest son works and lives in the Netherlands. Holland has a 16% sales tax and the highest income tax bracket is 60%, yet their dividend tax is 15%. 

Taxes on dividends and capital gains have been proven to be detrimental to tax revenue. 

It is not politics, it is economics that tell us the higher dividend and CG tax, the less money there is for infrastructure, education, police, etc. 

helmut 

Roberta

Good assessment.

When you capitalize 'GUARANTEED', just for giggles I went back and did a text search on the following with the number of times its mentioned:

Guaranteed - used 5 times

Security - used 27 times excluding when used in conjunction with 'Social Security'

Safety - used 4 times

What kind of surprised me is that this sales brochure didn't use the word 'protection', a popular marketing term for this kind of stuff.

BruceM

[/quote]

It's a gender and generational thing.  I used guaranteed as a broad brush for all of the synonyms. The imply it but use it sparingly b/c that particular word may have legal implications or provide grounds for a suit.  In that generation, males protected and provided.  Females were taken care of.  You went to college to get a husband, not a degree.  We were the first woman permitted to remain in the work force after marriage.  We didn't have to quit when we got pregnant b/c we might corrupt innocent children by displaying our growing bellies and make them think of sex.  We were expected to remain in abusive, loveless marriages b/c if we left who was going to take care of us?.  The openly stated rationale for not permitting us in places like grad school and med school was that we'd get married and have children and waste all that education and keep a man from that seat in school which would then allow him to provide for his family.

The man handled the money.  You got an allowance for the house and yourself.  To question your husband about money and finances was to question his manhood.  You see the results of this upbringing and acculturation in the complaints by some of the   men that their wives aren't interested in this finance thing and won't pay  attention to  their grand financial plans and orders.  That's why all these salesmen want to talk to my husband.

This changes significantly starting with the boomers and pre war babies 

Roberta