Increasingly Reliable Dividends

Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

“Are you crazy? The fall will probably kill you.” – Butch Cassidy

If you are overly concerned about the impact of the fiscal cliff, I urge you to stop reading and move on. I’m tired of hearing about it, sick of reading those very words, utterly and completely exhausted with the political posturing before each and every feeble attempt to resolve it. If you wake up every day worried about what your tax rate “might” be, stop reading. Now.

Unfortunately, courtesy of our esteemed, elected officials, far too many people are monumentally fretful with elements beyond their control, yet most of them seem to know exactly which holdings we ought to have, which ones we should avoid, and if not, look to Europe, since they don’t have cliffs of economic Armageddon over there, do they? The diatribes are unrelenting, exponentially worse than the banal blather about which stocks to own depending upon the outcome of the election of one single individual. But this is what we are forced to digest on a daily basis, which is completely logical when the Federal Reserve props up the economy with a bowed two-by-four, supporting a rusty a/c unit spilling out from the window of a doublewide. Oh, I almost forgot; if your timeframe for holding a stock “long” is between 60 and 120 minutes, you can leave the room, as well.

My understanding of investing is selecting strong, venerable, growth-oriented companies with bullet-proof balance sheets, as well as business models. If they happen to throw a bone to loyal shareholders by way of a decent quarterly dividend, prone to steady increases over the course of time, that’s even better.

Diebold (NYSE: DBD), has a healthy habit of increasing their dividend payout since well before the '90s (1954, actually). And although the stock is down around 14% since I mentioned it late July, it entered oversold territory before turkey day and has been mounting a steady climb over 6% since closing just above $28 Nov. 15. That very day also happens to mark the occasion when it was announced that Diebold entered an agreement with South Africa’s fastest growing retail bank, Capitec, which selected Diebold’s cash recycling ATMs as the model of choice for their customers. With the added business, shareholders might see more than the recent 2% dividend raise this past February.

Another solid stalwart of dividend increases (since 1957) is Emerson Electric (NYSE: EMR), with a recent robust 18% swelling last November. The company doles out $1.64 per share annually to shareholders, weighing in with a 3.3% yield at current share prices around $50. The stock is up 6% year-to-date, well off July lows at $44. With the last increase almost 13 months in the rear view mirror, another raise could be on the horizon. But we shouldn’t expect the same substantial one as last time.

And the opportunity for more dividend growth presents itself with Dover Corp. (NYSE: DOV). Dover produces and sells their products and services to a broad spectrum of businesses, from aerospace, to oil and gas, communications technologies, and printing and identification solutions for consumer goods markets. The company beefed up their dividend in August 2011 by 15% and has been a steady dividend booster since 1956. Dover is up around 7% year-to-date and about $12 better from July lows of $51 a share. Given that the last dividend hike was almost 16 months ago, the potential is there for an increase from the current $1.40 per share annually (2.2% yield).

While like most, I won’t be impervious to a capital gains tax increase, which seems likely. But for my non-tax accounts, stocks like these, which continually improve shareholder dividends regardless of the economic situation, certainly warrant consideration in portfolios for a “safe” dividend investment.


kmet312 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Emerson Electric Co.. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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