Since the economic crash of 2008, Wall Street is still looking for more stimulus. Not only have they asked for low interest rates but also got a promise from the FED that they will be low for several years. They also asked for the FED to help in terms of economic stimulus which led to QE1 and QE2 (and are now anxiously waiting for a hypothetical QE3). They were not entirely satisfied so the FED also danced for them (Operation Twist with bonds). And now… Wall Street is seeking another kind of stimulus. At least, this time, it won’t come from the Government.
Letting Money Sleep In a Bank Account Is A Crime
I often use this line when I talk to people who let their money hibernate (‘cause the sleeping period is too short to describe this phenomenon) in their bank account without interest. Well, this is exactly what a lot of companies are doing right now.
The amount estimated as liquidity in companies’ bank accounts is at $2.23 trillion. This is the equivalent to 19% of the US disposable income according to Paul Ashworth from Capital Economics. When you think about it, huge companies such as Apple or Google should imitate Microsoft and start giving money back. This is exactly what Apple did by announcing its first dividend payout not so long ago. But when you think about it, how many companies could contribute sustainably to a higher dividend payout?
I was curious so I pulled out all US stocks over $10 paying at least a 2% dividend yield and a payout ratio under 50% and a dividend growth of at least 2%. My point is to know how many stocks could use a good part of their liquidity to increase their dividend payouts up to a payout ratio of 50%.
Stocks With a Huge Possibility of Dividend Increase
178 US Stocks:
Ticker INDUSTRY_SUBGROUP Name Price Dividend Yield Payout Ratio Dividend 5 year growth
PBT Oil-US Royalty Trusts Permian Basin Royalty Trust 21.3 6.27 0 2.02
THFF Commer Banks-Central US First Financial Corp/IN 31.05 3.03 33.29 2.03
WABC Commer Banks-Western US Westamerica Bancorporation 46.08 3.21 47.41 2.04
DD Chemicals-Diversified EI du Pont de Nemours & Co 52.62 3.12 44.52 2.07
NIDB S&L/Thrifts-Central US Northeast Indiana Bancorp Inc 14.65 4.91 42.65 2.1
HTLF Commer Banks-Central US Heartland Financial USA Inc 17 2.35 32.18 2.13
PNBI Commer Banks-Southern US Pioneer Bankshares Inc 18.5 3.24 36.93 2.17
UVV Tobacco Universal Corp/VA 45.9 4.27 31.78 2.2
KWR Chemicals-Specialty Quaker Chemical Corp 41.42 2.32 27.51 2.22
MRINA Divers Oper/Commer Serv McRae Industries Inc 17.09 2.11 17.8 2.22
FDBC Commer Banks-Eastern US Fidelity D&D Bancorp Inc 21.3 4.69 43.81 2.59
HMN Multi-line Insurance Horace Mann Educators Corp 17.83 2.92 26.94 2.71
FFIC S&L/Thrifts-Eastern US Flushing Financial Corp 12.64 4.11 45.01 2.93
WASH Commer Banks-Eastern US Washington Trust Bancorp Inc 23.49 3.92 48.12 2.94
PSBQ Commer Banks-Central US PSB Holdings Inc/WI 28 2.64 21.62 2.95
UTMD Disposable Medical Prod Utah Medical Products Inc 30.85 3.11 46.3 2.99
GSBC Commer Banks-Central US Great Southern Bancorp Inc 22.96 3.14 36.93 3.04
WHR Appliances Whirlpool Corp 64.17 3.12 38.01 3.06
CTBI Commer Banks-Southern US Community Trust Bancorp Inc 32.37 3.83 48.51 3.1
MTB Commer Banks-Eastern US M&T Bank Corp 87.39 3.2 43.04 3.13
SRCE Commer Banks-Central US 1st Source Corp 23.02 2.78 32.42 3.18
MBCN Commer Banks-Central US Middlefield Banc Corp 22.25 4.67 42.71 3.21
HUB/B Power Conv/Supply Equip Hubbell Inc 79.53 2.06 33.86 3.26
NFG Electric-Integrated National Fuel Gas Co 45.85 3.1 44.75 3.42
QNBC Commer Banks-Eastern US QNB Corp 25.85001 4.02 35.48 3.51
CPK Gas-Distribution Chesapeake Utilities Corp 41.13 3.36 47.24 3.53
CBSH Commer Banks-Central US Commerce Bancshares Inc/MO 39.85 2.31 30.87 3.57
TFX Medical Products Teleflex Inc 62.44 2.18 45.88 3.59
ESBF S&L/Thrifts-Eastern US ESB Financial Corp 13.01 3.08 37.03 3.71
FFIN Commer Banks-Central US First Financial Bankshares Inc 33.39 2.88 43.57 3.71
PFS S&L/Thrifts-Eastern US Provident Financial Services Inc 13.75 3.49 43.63 3.71
INDB Commer Banks-Eastern US Independent Bank Corp/Rockland MA 28.38 2.96 35.88 3.71
KRO Coatings/Paint Kronos Worldwide Inc 22.8 2.63 38.82 3.71
SVBC S&L/Thrifts-Southern US Sistersville Bancorp Inc 16 4 22.46 3.78
MMM Diversified Manufact Op 3M Co 87.48 2.7 36.31 3.79
PEG Electric-Integrated Public Service Enterprise Group Inc 30.41 4.67 49.26 3.8
BHB Commer Banks-Eastern US Bar Harbor Bankshares 35.6 3.2 38.29 3.83
SNA Tools-Hand Held Snap-on Inc 61.65 2.21 27.76 4.1
MMC Insurance Brokers Marsh & McLennan Cos Inc 32.38 2.72 48.54 4.1
TSH S&L/Thrifts-Southern US Teche Holding Co 36.8 3.97 41.05 4.14
SYBT Commer Banks-Southern US SY Bancorp Inc 22.64 3.36 42.07 4.35
LKFN Commer Banks-Central US Lakeland Financial Corp 25.28 2.69 32.8 4.4
FMAO Commer Banks-Central US Farmers & Merchants Bancorp Inc/Archbold OH 22 3.45 41.85 4.5
CNAF Commer Banks-Eastern US Commercial National Financial Corp/PA 23.29 4.47 40.91 4.56
ALV Auto/Trk Prts&Equip-Orig Autoliv Inc 65.78 2.86 25.49 4.77
ESBK S&L/Thrifts-Eastern US Elmira Savings Bank FSB/The 18.05 4.88 45.85 4.91
CBU Commer Banks-Eastern US Community Bank System Inc 28.58 3.64 49.27 5.24
SWX Gas-Distribution Southwest Gas Corp 41.55 2.84 43.9 5.27
HBNC Commer Banks-Central US Horizon Bancorp/IN 21.31 2.44 20.27 5.3
BMTC Commer Banks-Eastern US Bryn Mawr Bank Corp 20.84 3.07 38.95 5.35
LANC Food-Misc/Diversified Lancaster Colony Corp 64.9 2.22 33.56 5.42
CAG Food-Misc/Diversified ConAgra Foods Inc 26.25 3.66 45.88 5.48
GNTX Electronic Compo-Misc Gentex Corp 21.23 2.45 41.79 5.5
DIMC Commer Banks-Eastern US Dimeco Inc 36 4 43.48 5.53
PUSH Food-Retail Publix Super Markets Inc #N/A N/A 3.81 28.06 5.79
TMP Commer Banks-Eastern US Tompkins Financial Corp 39.8 3.62 43.54 5.9
MOCO Instruments-Controls MOCON Inc 16.8 2.5 39.41 5.92
CATC Commer Banks-Eastern US Cambridge Bancorp 34.00999 4.35 43.15 5.92
GMT Transport-Equip&Leasng GATX Corp 42.47 2.83 48.58 6.1
LARK Commer Banks-Central US Landmark Bancorp Inc/Manhattan KS 19.85 3.83 44.92 6.13
SXT Chemicals-Specialty Sensient Technologies Corp 38.35 2.19 34.68 6.26
BA Aerospace/Defense Boeing Co/The 73.55 2.39 31.49 6.34
NKSH Commer Banks-Southern US National Bankshares Inc 29.42 3.54 39.34 6.5
BKYF Commer Banks-Southern US Bank of Kentucky Financial Corp 25.32 2.37 26.82 6.67
ACO Diversified Minerals AMCOL International Corp 29.45 2.44 38.03 6.72
FISI Commer Banks-Eastern US Financial Institutions Inc 16.46 3.16 29.33 6.79
EEI Environ Consulting&Eng Ecology and Environment Inc 14.91 3.22 28.21 6.96
MGRC Rental Auto/Equipment McGrath RentCorp 28.87 3.26 45.75 6.98
MPR Air Pollution Control Eq Met-Pro Corp 10.16 2.8 14.61 7.04
SPLS Retail-Office Supplies Staples Inc 15.655 2.81 28.23 7.17
FLIC Commer Banks-Eastern US First of Long Island Corp/The 27.43 3.35 40.59 7.29
FRS Retail-Restaurants Frisch\'s Restaurants Inc 27.44 2.33 30.88 7.44
TUP Consumer Products-Misc Tupperware Brands Corp 61.66 2.34 33.21 7.44
MLGF S&L/Thrifts-Western US Malaga Financial Corp 15.25 3.28 21.12 7.74
STLD Steel-Producers Steel Dynamics Inc 12.89 3.1 31.44 7.78
GCBC S&L/Thrifts-Eastern US Greene County Bancorp Inc 17.7 3.95 31.13 7.84
NEE Electric-Integrated NextEra Energy Inc 63.46 3.78 47.66 7.95
EBTC Commer Banks-Eastern US Enterprise Bancorp Inc/MA 16.53 2.66 36.05 7.98
XOM Oil Comp-Integrated Exxon Mobil Corp 85.3 2.2 22.71 7.99
CZFS Commer Banks-Eastern US Citizens Financial Services Inc 36.75 3.27 24.53 8
CASC Machinery-Material Handl Cascade Corp 47.54 2.94 15.69 8.09
CMP Quarrying Compass Minerals International Inc 74.13 2.67 39.75 8.36
TWX Multimedia Time Warner Inc 36.6 2.84 34.55 8.39
HPQ Computers Hewlett-Packard Co 24.51 2.15 11.93 8.45
COL Aerospace/Defense Rockwell Collins Inc 55.56 2.16 24.07 8.45
BANF Commer Banks-Central US Bancfirst Corp 43.45 2.49 34.6 8.65
NU Electric-Integrated Northeast Utilities 36.46 3.22 49.56 8.69
CB Property/Casualty Ins Chubb Corp/The 71.92 2.28 26.52 8.72
R Transport-Services Ryder System Inc 49.2 2.36 33 8.73
CVX Oil Comp-Integrated Chevron Corp 102.52 3.16 22.83 8.86
CBE Diversified Manufact Op Cooper Industries PLC 62.11 2 29.63 9.05
CNND Commer Banks-Eastern US Canandaigua National Corp 105.01 2.86 33.14 9.11
ODC Chemicals-Specialty Oil-Dri Corp of America 20.6 3.3 47.56 9.17
CCFN Commer Banks-Eastern US CCFNB Bancorp Inc 35 3.54 40.66 9.44
FL Retail-Apparel/Shoe Foot Locker Inc 31 2.32 36.33 9.44
NOC Aerospace/Defense Northrop Grumman Corp 61.81 3.24 26.03 9.51
TRV Property/Casualty Ins Travelers Cos Inc/The 62.75 2.93 46.95 9.54
ROK Industrial Automat/Robot Rockwell Automation Inc 78.33 2.17 30.19 9.55
AIT Machinery-General Indust Applied Industrial Technologies Inc 39.3 2.14 30.7 10.2
ACE Multi-line Insurance ACE Ltd 75.3 2.6 22.33 10.4
NHC Medical-Nursing Homes National Healthcare Corp 45.06 2.66 29.45 10.76
MDNB S&L/Thrifts-Southern US Minden Bancorp Inc 14.25 2.22 17.83 10.8
JCI Auto/Trk Prts&Equip-Orig Johnson Controls Inc 31.96 2.25 26.79 10.83
SJM Food-Confectionery JM Smucker Co/The 79.97 2.4 41.01 10.91
EV Invest Mgmnt/Advis Serv Eaton Vance Corp 26.3 2.89 39.93 10.96
DOV Diversified Manufact Op Dover Corp 60.12 2.1 25.92 10.97
SRE Gas-Distribution Sempra Energy 64.51 3.72 33.97 11.01
CBKM Commer Banks-Central US Consumers Bancorp Inc 14 3.14 37.23 11.1
APD Chemicals-Diversified Air Products & Chemicals Inc 89.75 2.85 38.99 11.2
BAX Medical Products Baxter International Inc 54.17 2.47 32.36 11.47
AVX Electronic Compo-Misc AVX Corp 12.82 2.34 13.24 11.63
UBNK S&L/Thrifts-Eastern US United Financial Bancorp Inc 15.58 2.31 45.31 11.65
CCF Diversified Manufact Op Chase Corp 15.31 2.29 28.67 11.84
FIS Data Processing/Mgmt Fidelity National Information Services Inc 33.07 2.42 15.39 11.84
BOBE Retail-Restaurants Bob Evans Farms Inc/DE 37.07 2.7 43.67 11.96
COP Oil Comp-Integrated ConocoPhillips 72.88 3.62 29.21 12.12
WEYS Footwear&Related Apparel Weyco Group Inc 22.85 2.8 46.46 12.2
ITW Diversified Manufact Op Illinois Tool Works Inc 55.79 2.58 33.97 12.3
ETN Diversified Manufact Op Eaton Corp 47.44 3.2 34.22 12.41
SPAN Medical Products Span-America Medical Systems Inc 16.52 2.66 31.54 12.42
UTX Aerospace/Defense-Equip United Technologies Corp 81 2.37 32.13 12.62
WSM Retail-Mail Order Williams-Sonoma Inc 38.39 2.29 32.21 12.79
RTN Aerospace/Defense Raytheon Co 53.11 3.77 32.4 12.92
BDX Medical Products Becton Dickinson and Co 76.43 2.36 28.59 13.33
ARLP Coal Alliance Resource Partners LP 60.47 6.55 34.26 13.44
MSFT Applications Software Microsoft Corp 32.42 2.47 23.33 13.63
HRL Food-Meat Products Hormel Foods Corp 28.59 2.1 28.69 13.86
GD Aerospace/Defense General Dynamics Corp 69.76 2.92 26.84 14.4
INTC Electronic Compo-Semicon Intel Corp 27.6 3.04 31.89 14.48
EAT Retail-Restaurants Brinker International Inc 27.9 2.29 36.46 14.62
TAP Brewery Molson Coors Brewing Co 41.3 3.1 34.18 14.87
BOKF Commer Banks-Central US BOK Financial Corp 54.69 2.41 26.73 15.06
DE Machinery-Farm Deere & Co 80.91 2.27 22.79 15.28
TROW Invest Mgmnt/Advis Serv T Rowe Price Group Inc 61.88 2.2 41.11 15.42
WMT Retail-Discount Wal-Mart Stores Inc 62.45 2.55 32.02 15.62
AFL Life/Health Insurance Aflac Inc 41.62 3.17 28.11 15.8
XLNX Electronic Compo-Semicon Xilinx Inc 34.4 2.56 26.34 16.12
AMP Invest Mgmnt/Advis Serv Ameriprise Financial Inc 53.45 2.1 18.66 17.13
MDT Medical Instruments Medtronic Inc 37.61 2.58 31.3 17.13
MTSC Computers-Integrated Sys MTS Systems Corp 47.85 2.09 25.95 17.18
CL Cosmetics&Toiletries Colgate-Palmolive Co 98.88 2.51 49.49 17.37
BBY Retail-Consumer Electron Best Buy Co Inc 21.47 2.98 18.64 17.61
LLL Electronics-Military L-3 Communications Holdings Inc 69.91 2.86 19.67 17.89
OXY Oil Comp-Explor&Prodtn Occidental Petroleum Corp 88.61 2.44 22.55 17.98
CCE Beverages-Non-alcoholic Coca-Cola Enterprises Inc 28.96 2.21 21.72 18.04
SSI Retail-Regnl Dept Store Stage Stores Inc 15.49 2.32 35.64 18.13
NSC Transport-Rail Norfolk Southern Corp 69.53 2.7 30.06 18.51
CAH Medical-Whsle Drug Dist Cardinal Health Inc 41.55 2.07 29.06 19.03
SGK Data Processing/Mgmt Schawk Inc 12.94 2.47 39.78 19.74
RSRV Oil Comp-Explor&Prodtn Reserve Petroleum Co 335.01999 5.97 30.52 20.11
CA Enterprise Software/Serv CA Inc 26.56 3.77 9.84 20.11
AM Consumer Products-Misc American Greetings Corp 15.12 3.97 25.69 20.11
TGT Retail-Discount Target Corp 57.28 2.09 26.53 20.11
HAS Toys Hasbro Inc 35.92 4.01 41.07 20.11
SWY Food-Retail Safeway Inc 22.09 2.63 36.31 20.32
LMT Aerospace/Defense Lockheed Martin Corp 90.84 4.4 40.93 21.91
HRS Telecommunication Equip Harris Corp 44.1 2.99 21.6 22.69
STX Computers-Memory Devices Seagate Technology PLC 29.21 3.42 31.77 23.05
WAG Retail-Drug Store Walgreen Co 35.93 2.5 25.24 23.36
BLK Invest Mgmnt/Advis Serv BlackRock Inc 190.4 3.15 43.39 23.85
IVZ Invest Mgmnt/Advis Serv Invesco Ltd 24.18 2.03 30.27 26.05
CME Finance-Other Services CME Group Inc 273.05 3.27 20.61 27.95
UNP Transport-Rail Union Pacific Corp 107.26 2.24 28.49 28.03
STRA Schools Strayer Education Inc 86.13 4.64 46.31 28.88
IPHS Chemicals-Diversified Innophos Holdings Inc 49.33 2.19 25.05 29.51
DRI Retail-Restaurants Darden Restaurants Inc 49.93 3.44 36.83 30.18
CSX Transport-Rail CSX Corp 21.61 2.22 26.4 30.19
ACN Computer Services Accenture PLC 63.4 2.13 28.26 30.99
CLF Metal-Iron Cliffs Natural Resources Inc 67.3 3.71 7.26 31.42
HUN Chemicals-Diversified Huntsman Corp 14.49 2.76 38.95 31.95
AWH Reinsurance Allied World Assurance Co Holdings AG 70.66 2.12 15.63 37.97
TWGP Property/Casualty Ins Tower Group Inc 21.29 3.52 46.34 49.63
CPA Airlines Copa Holdings SA 80.65 2.03 23.51 53.89
ESV Oil&Gas Drilling Ensco PLC 52.95 2.83 44.82 70.12
CALM Food-Misc/Diversified Cal-Maine Foods Inc 35.41 4.11 33.37 79.86
GES Retail-Apparel/Shoe Guess? Inc 29.79 2.69 27.93 92.84
WU Commercial Serv-Finance Western Union Co/The 18 2.22 16.66 102.44
GKSR Linen Supply&Rel Items G&K Services Inc 33 2.36 21.43 116.13
20 CDN Stocks:
Ticker Name INDUSTRY_SUBGROUP Price Dividend Yield Payout Ratio Dividend 5 year growth
NMC Newmont Mining Corp of Canada Ltd Gold Mining 50.2 2.79 0 20.79 20.79
IMG IAMGOLD Corp Gold Mining 12.21 2.13 0.02 26.46 26.46
BEI-U Boardwalk Real Estate Investment Trust REITS-Apartments 58.88 3.16 7.25 6.02 6.02
MRD Melcor Developments Ltd Real Estate Oper/Develop 15.05 2.66 14.81 5.92 5.92
DII/B Dorel Industries Inc Home Furnishings 29.37 2.04 18.62 32.76 32.76
MG Magna International Inc Auto/Trk Prts&Equip-Orig 45.57 2.39 23.18 6.43 6.43
CWB Canadian Western Bank Commer Banks Non-US 28.51 2.1 24.04 14.87 14.87
CSU Constellation Software Inc/Canada Computer Software 88.43 4.48 26.97 41.18 41.18
CCL/B CCL Industries Inc Containers-Metal/Glass 37.67 2.07 27.55 9.86 9.86
ESI Ensign Energy Services Inc Oil&Gas Drilling 14.26 2.95 28.13 5.23 5.23
MX Methanex Corp Chemicals-Specialty 31.4 2.15 30.75 3.54 3.54
SNC SNC-Lavalin Group Inc Engineering/R&D Services 39.25 2.24 33.46 23.16 23.16
LB Laurentian Bank of Canada Commer Banks Non-US 44.55 4.04 33.69 8.45 8.45
SC Shoppers Drug Mart Corp Retail-Drug Store 44 2.41 35.29 14.31 14.31
NA National Bank of Canada Commer Banks Non-US 78.64 3.81 38.36 7.02 7.02
TD Toronto-Dominion Bank/The Commer Banks Non-US 83.94 3.43 40.57 7.26 7.26
ADW/A Andrew Peller Ltd Beverages-Wine/Spirits 10.08 3.57 43.12 8.14 8.14
BNS Bank of Nova Scotia Commer Banks Non-US 54.75 4.02 44.36 5.43 5.43
RY Royal Bank of Canada Commer Banks Non-US 57.15 3.99 46.61 6.88 6.88
BDI Black Diamond Group Ltd Rental Auto/Equipment 20.51 3.22 49.85 18.33 18.33
Obviously, this won’t happen tomorrow for several reasons. Some companies prefer to reinvest in their business, make acquisitions and others would rather pay off debts or start a share repurchase program, etc. But the point is that the potential is there. As investors, we can see how many stocks have the power to increase their dividend greatly and reward us.
The Dividend Impact on the Economy
If there was a massive dividend increase movement, I can see 2 very interesting impacts. The first one would be a great interest in these stocks. Every time that the market foresees a sustainable dividend increase, they are more likely to buy this stock for future payouts. Therefore, I guess this would be quite beneficial for CEO’s who wish to exercise some of their options in a near future ;-). This would probably push is into an official bullish market. For the past 2 years, analysts tend to say, after the fact, that “last year was bullish. It would be refreshing to hear them talking about the future for once.
This would lead to the other impact, that would probably be more important than just stocks skyrocketing (mind you, I’d love to see my portfolio get a solid boost!). If there are more dividends distributed to investors, it also means that there is more cash available to spend! Mr. Ashworth’s theory is that it could increase the population’s disposable income by 2%. This would create a great economic boost!
I think it’s an interesting theory since retirees would tend to spend a little bit more to enjoy life if they can count on stronger income. It would also give a break to defined contribution pension plan where companies have to make sure there is enough money to fund the pensions. If the market was ecstatic when there were those stimulus checks back in 2008-20009, I guess that “continuous” stimulus dividend checks would create a positive reaction on the overall economy as well. In addition to that, even the Government would get its share in taxes. So the company sees its stock go higher, the investor sees more money coming in and the Government sees additional revenues. It sounds like a win-win-win situation for everybody!
The Problem is Volatility
Unfortunately, chances are that we won’t see tons of companies boosting their dividend to reach a 50% payout ratio. The economic volatility and uncertainty around the Euro Zone, the slower growth from emerging markets and the slow economic restart in the US are among the reasons why companies prefer being full of cash instead of distributing their liquidity. But I’m expecting to see some steady dividend increase from many companies in the years to come. Since profit is still rising, they will continue to hike their dividend and make some of us happy. I personally think that we are in the middle of an awesome investing opportunity where the stock you buy right now will provide you incredible yield in 10 years.
I can’t wait to write that I’m earning a 10% dividend yield on my INTC or KO shares in 10 years ;-).
Hi Mike,
Back to Cornwall (snow falling) after 6 months in Florida. Your Ipad is great!
I’m sure your INTC will be earning above 10% (YOC) in 10 years. I’ve had TD for 15 years! Thanks for the great posts!
Excellent! Thanks for putting this together 🙂