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Investors, often hungry for yield, tend overlook the track record of dividends. In particular, it’s important to ferret out stock dividend increases.
Dividends can make a huge difference. Consider that the S&P 500 stocks have gained 71% in the last five years. Add in the dividends of those stocks and the total return for the S&P 500 over those same five years is an impressive 91%.
Thus, investors can increase their gains by focusing on companies that consistently raise their payouts. Consider the PowerShares High Yield Dividend Achievers (NASDAQ: PEY), which focuses on 50 dividend achievers — those that have offered stock dividend increases for 10 years or more.
The total return of the PowerShares High Yield ETF is 119% in the last 10 years, topping the S&P 500 total return by 20 percentage points.
With all that in mind, we’ve uncovered stocks that plan to pay investors more. Here are five compelling dividend stocks with stock dividend increases for the month of February:
No. 1: Finish Line (NASDAQ: FINL)
Finish Line is increasing its quarterly dividend this month by 10% to $0.11 a share. This shoe retailer has introduced annual dividend increases for seven straight years, and pays out 35% of its earnings via dividends.
Shares have fallen, however, 17% in the last six months given declining store traffic. The stock is now very attractive from a valuation perspective. The weakness in the retail sector has unjustifiably pushed the stock down. Finish Line now trades at 12 times next year’s earnings, a discount to other major shoe companies, including Foot Locker (NYSE: FL).
To help turn things around, Finish Line is still counting on its partnership with Macy’s (NYSE: M), in which it operates store-in-a-store locations. In addition, it will shut down its underperforming JackRabbit business.
Shares trade ex-dividend Feb. 22.
No. 2: Meredith Corp. (NYSE: MDP)
Meredith is raising its dividend by 5% this month; soon it will pay out $0.52 a share quarterly. Its dividend yield is a robust 3.4% and the media company has a four-year streak of consecutive dividend increases.
The traditional print media industry has been struggling, but Meredith is doing well. The company’s business is made up of TV stations and magazines, but it’s also profiting from its digital media operations — with digital ad revenues up an impressive 16% last quarter. It’s also doing a very good job of reaching millennials, who are difficult to attract for most media companies.
Shares trade ex-dividend Feb. 24.
No. 3: Corning (NYSE: GLW)
Corning will increase its dividend by a hefty 15% later this month. The glass company will pay out $0.155 a share quarterly. Corning offers a 2.3% dividend yield and has a six-year streak of consecutive dividend increases.
The company has previously relied heavily on its LCD glass business, but is now transitioning to less-price-sensitive products. This has helped pushed the stock to all-time highs, but it’s still too cheap to ignore, at eight times earnings. Plus, its staple product – Gorilla Glass – is entering new markets, including the auto market.
Corning stock trades ex-dividend on Feb. 24.
No. 4: Polaris Industries (NYSE: PII)
Polaris, the recreational vehicle manufacturer, is upping its dividend payment by 5% toward the end of the month. Its new quarterly dividend will be $0.58 a share and it’s yielding 2.5%. Polaris now has a five-year streak of consecutive dividend increases. It’s also a consistent buyer of its own shares, as the stock has gotten cheap recently.
Polaris shares have fallen 40% in the last 18 months or so, given the weakness in the oil and gas markets, which has affected the demand for off-road vehicles. Now, Polaris trades at a deep discount to top peer Arctic Cat (NASDAQ: ACAT). To turn things around, Polaris is working on cutting costs and developing new products to appeal to the younger generation.
The stock trades ex-dividend Feb. 27.
No. 5: Omega Protein (NYSE: OME)
Omega Protein, the fishing fleet operator that produces animal food and food ingredients, is a bit of a “different” dividend that has made our list. Omega Protein will pay its first-ever dividend this month — $0.05 a share quarterly. Its dividend yield is roughly 0.8%.
The beauty of Omega’s business is that it produces a lot of cash and is a one-of-a-kind business model. Omega benefits from the worldwide trend of rising protein consumption. Omega Protein stock trades at just 14 times next year’s earnings estimates and the company has a fortress balance sheet with no debt. An activist investor, Wynnefield Capital, is pushing the company to break up in an effort to unlock shareholder value.
Shares trade ex-dividend on Feb. 17.