7 Dividend Hikes That Made Noise in November

Sometimes it can feel like the walls are closing in on you. Europe is struggling with an unprecedented debt crisis. China's growth is slowing, and some are hinting at a potential hard landing. In the U.S., employment growth remains stagnant and the dreaded "r" word (recession) is starting to creep back into sight. Luckily for investors, there's still a healthy group of companies out there that simply don't care about global macroeconomic uncertainty.

After scouring through dozens of companies that raised their dividends in November, I've come up with seven that truly stood out among the pack. Here they are in no particular order:

Company

Dividend Increase

New Projected Yield

Home Depot (NYS: HD)

16%

3.0%

Disney (NYS: DIS)

50%

1.7%

Union Pacific (NYS: UNP)

26%

2.4%

Nike (NYS: NKE)

16%

1.5%

Whole Foods Market (NAS: WFM)

40%

0.8%

Lincoln National (NYS: LNC)

60%

1.7%

Starbucks (NAS: SBUX)

31%

1.6%

Source: Bloomberg, Yahoo! Finance, author's calculations.

This actually isn't Home Depot's first rodeo this year when it comes to dividend increases. Back in February, the home improvement goliath raised its dividend by 5.8%, which makes its 16% increase in November all the more impressive. With banks still unwilling to lend en masse and more than one-quarter of homeowners still underwater on their homes, the number of remodels we've witnessed has soared. Home Depot is raising its targeted payout ratio to 50%, and last month's dividend hike perfectly aligns the company with that target.

Mickey must be rolling in the dough, because Disney's 50% annual dividend hike was its biggest increase in decades. The theme park and television network owner reaped the benefits of record revenue and profits in 2011. Even more compelling, Disney also repurchased $5 billion worth of shares during fiscal 2011. Often heralded as a conservatively run company, these moves can only be construed as extremely bullish for Disney's future.

Railroads continue to be a primary escape to rising oil prices, with Union Pacific being a perfect example. Many simply don't understand that railroads are a considerably more fuel-efficient way to transport goods. In its most recent results, Union Pacific reported exceedingly high free cash flow and a very bright outlook. Like Home Depot, this is the second time management has chosen to raise the dividend in 2011. For the year, Union Pacific's dividend has jumped a whopping 58%, and momentum in the railroad sector shows little sign of slowing.

Nike has been no stranger to increasing dividends over the past decade. In fact, the shoe giant's 16% quarterly dividend hike marks the 10th consecutive year that it has raised its dividend. Over that span, Nike's dividend has grown annually by an average of nearly 20%. Retail is always a fickle sector, but Nike has been able to shake off two recessions and global worries almost as if they didn't exist. Nike is slated to grow at nearly 11% over the next five years, and with its payout ratio at a reasonable 26%, it looks poised to continue to reward shareholders moving forward.

Apparently, salads aren't the only green Whole Foods shareholders are going to be seeing in the near future. After hitting a rough patch in its growth, Whole Foods has reemerged with a vengeance. In the fourth quarter, the company marked its eighth straight quarter of same-store sales increases on the heels of a 12% rise in sales. Like Disney, Whole Foods chose to not only raise its dividend substantially but also introduce a $200 million share repurchase program. That's the type of quarterly dressing any shareholder would gladly put on their salad.

Dividends don't have to have huge monetary increases to make a sizable impact. Take Lincoln National, for example, a life insurance and annuity provider that's under most investors' radars. Honestly, how often do you pay attention to what insurers are doing? Well, here's why you should: The company announced a 60% jump in its quarterly payout three weeks ago. This is in addition to share repurchase programs the company already has in place. Trading at just 41% of book value and with a minuscule payout ratio, this dividend has plenty of room to rocket higher.

It would be a stretch to call coffee a staple, but I dare you to try to pry that coffee cup from my hands before noon. Starbucks has been all but unstoppable this year, thanks to its ability to pass along rising costs to its customers and the United States' insatiable appetite for coffee. For the fourth quarter, Starbucks reported a 10% jump in same-store sales in the U.S. and 6% internationally. Even better for shareholders, for the full year Starbucks returned $945 million in the form of dividends and share buybacks -- more than doubling its output in 2010. Starbucks is a global powerhouse, and I see little in terms of competition standing its way.

Foolish roundup
One fact overlooked until now is just how diversified this group of overachievers is -- home improvement, media, railroads, retail, grocers, insurance, and restaurants are all represented. This goes to show that there are outperformers to be had from every sector of the market; we just have to learn to look hard to find them.

These seven dividend standouts barked for the whole world to hear in November. The question is: Did you hear them?

What dividend-paying company do you have in your portfolio that's giving you an extra bonus this holiday season? Tell us in the comments section below and consider downloading a free copy of our latest report, "11 Rock-Solid Dividend Stocks," with handpicked recommendations from our top analysts.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He is practically inseparable from his love affair with Starbucks coffee. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Starbucks and Whole Foods Market. Motley Fool newsletter services have recommended buying shares of Home Depot, Walt Disney, Nike, Whole Foods, and Starbucks, as well as creating a diagonal call position in Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's always looking for ways to return value to its readers.

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wmalezchuk

Being a loyal shareholder of many a long year, I sure would like to see even a higher dividend than announced.

December 02 2011 at 4:29 PM Report abuse rate up rate down Reply
wmalezchuk

Being a loyal shareholder of many a long year, I sure would like to see even a higher dividend than announced.

December 02 2011 at 4:29 PM Report abuse rate up rate down Reply