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More Dividend Income Opportunities (MCD, YUM, MSFT, FB, TXN, CAG, CRBL)

October 3rd, 2012

From time to time we highlight some of the stocks that are part of the dividend universe, whether they’re increasing or decreasing their dividends or whether there is other news of interest, such as significant developments with earnings or other facets of these stocks’ businesses. In the last batch of recent dividend increases, there’s a mix of interesting investment possibilities to consider. Some of these look more attractive at first glance than after you look at them more closely, but each can be looked at closely by investors. We highlighted a couple of big name stocks in the fast food restaurant space and their dividend increases, bellwether McDonald’s (NYSE:MCD) and Yum! Brands (NYSE:YUM). There were some other intriguing stocks for dividend investors to examine.

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Microsoft (Nasdaq:MSFT) was one of the biggest names to recently announce a dividend increase. Microsoft, which has shifted over the many years from a growth stock which led the sector in software and related services, has become a meaningful dividend stock. The quarterly dividend hike to 23 cents a share is a 16 percent boost over its previous dividend, and the stock now yields 3 percent. Microsoft has raised its dividend eight consecutive years.
While Microsoft’s dividend payment puts it in the same category as some of the other large blue chips from the Nasdaq, DJIA and the S & P 500, it represents a shift in the tech world. As high tech, Microsoft is definitely “old tech,” more like IBM than Facebook (Nasdaq:FB). Some analysts question whether Microsoft’s dominance of the software and service space will continue, while it’s evident that its growth has slowed.

Some Three Percenters

Three percent isn’t a bad yield for stocks in the low and medium range of your portfolio, if they serve as more than income only investments. These kinds of stock tend to be older, established companies in industries that are not rapidly growing. But again, these stocks are often fairly stable and provide some anchoring for a portfolio in what can be a very unsettling, volatile market. Texas Instruments (NYSE:TXN), the semiconductor and electronics company, also raised its dividend, to 21 cents a share. The current yield for the stock is just a shade under 3 percent, depending on its recent closing price. Again, Texas instruments isn’t a rapid grower, and its earnings can sometimes be volatile, but it’s shown a nearly decade long commitment to dividend increases.

Food producer ConAgra (NYSE:CAG) now yields 3.6 percent. The company raised its dividend slightly to 25 cents a share. ConAgra definitely fits the mold as a slow-growing company, and while it is usually thought of as a relatively stable stock in a solid business, the food producing business is highly commoditized and is subject to margin pressures, as well as the event-related drought effects working their way through the food industry this year. ConAgra has been pressured by competition and its earnings haven’t been consistent in recent years.

Cracker Barrel (Nasdaq:CRBL), is another restaurant stock but it has an added component with its retail country stores. Last year it paid a 25 cents per share dividend, this year with its current increase; it now pays 50 cents per share each quarter, for a 3 percent yield. The company had previously been steadily edging up its dividend prior to this year’s jump. Its unique theme in the competitive fast food space makes it worth looking at.

A Unique Guarantee

Enterprise Products Five Year Chart

Source: Yahoo Finance

For Investors

Investors can and should look beyond the dividend yields and the increases that companies often make. Some stocks raise their dividends because their businesses are lackluster and it’s a way of getting investors interested, hoping that the compensation of a dividend will make up for what might be a less attractive stock. Other times, the yield and the increase mesh perfectly with a thriving business and a stock that’s worth owning. Investors need to look carefully and learn to ascertain the difference.

Written By Jim Trippon

Jim Trippon is a maverick that has dedicated his investment career to helping investors make smarter financial and stock selection decisions. Trippon,  an internationally recognized expert on global and value investing, has a deep passion for finding hidden value in global equity markets. Trippon started his career as a financial statement examiner with Price Waterhouse which allows him to dissect a public company’s financial  picture and better identify hidden gems. Trippon’s savvy approach to investing and personal finance makes him in high demand by major media who seek his unique perspective on stocks and global economics. He has  been featured in top publications both in the US and abroad including  Bloomberg, Investor’s Business Daily, The New York Times, The International Herald Tribune, Stock Futures and Options Magazine, The Bull and Bear Financial Report and he regularly appears on broadcast television including as an on air contributor to CNBC, CNN, Fox Business, and Fox News.


Dividends, Technology



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