The Best Dividend Hikes of the Week (KO, HFC, KMB, TXN, WMT, XRX)

February 22, 2013 by Jon C. Ogg

This last week sure felt like a long week in the market, although it was only a four-day week. We saw several key dividend announcements from some great American companies. Some of the higher dividend announcements really created interest in the underlying stocks this last week. There were many other dividend hikes and announcements this last week but these are the standout dividend winners we tracked.

The Coca-Cola Company (NYSE: KO) took its dividend up yet again, proving its dividend aristocrat status. Shares are still 6% south of a 52-week high and yield was already 2.7%. Coke raised its quarterly payout by 10% to $0.28 per share per quarter and the yield is almost 3% now. Our take: Coke leads Pepsi in the dividend investor taste test, although Jim Cramer thinks Pepsi is better right now.

HollyFrontier Corporation (NYSE: HFC) might not sound like an exciting dividend on the surface, but it is. The refiner lifted its payout a sharp 50% to $0.30 per share as the fifth increase in the regular dividend since the merger in July 2011. It also announced a special cash dividend of $0.50 per share and that was the 8th special dividend since August 2011. If you combine the common and special payouts as a norm, the yield is 5.7% announalized. Otherwise the yield is closer to 2.2%.

Kimberly-Clark Corp. (NYSE: KMB) just put more pressure on its consumer products peers to raise their quarterly payouts. It increased its dividend payout by about one-tenth even when its shares were already at all-time highs. The 3.2% yield was already high, but now that will be a 3.5% yield for investors who want to chase the stock with new money.

Texas Instruments Inc. (NASDAQ: TXN) is magically back up to within 1% a 52-week high. The company added $5 billion to its stock buyback plan (against a $37 billion market cap) and the dividend was raised by one-third to $0.28 from $0.21 per share per quarter. TI’s yield was already good at 2.5% and now that will be about 3.2%. A near 5% gain was hard to ignore in the stock price.

Wal-Mart Stores Inc. (NYSE: WMT) had earnings which were disappointing when you look at guidance and low same-store sales. The blame: payroll tax and delayed tax refunds. What bailed Wal-Mart out of a bad week was an 18% dividend hike to $1.88 on an annualized basis. The world’s largest retailer was paying almost 2.3% for a dividend yield but that is now going to be right at 2.7%.

Xerox Corporation (NYSE: XRX) is a boring “technology” play that we might just consider an office products play now. A dividend of $0.575 does not sound that high until you consider that the stock was under $8.00 at the time. This represents a gain of more than one-third and the new yield is just under 3% at $2.92%. Argus liked it enough to spend the hours required to write a two-page “reiterated buy” rating and the call sent shares up 3% Friday because the price target of $13 on the stock implies more than 50% upside for investors. This was the first dividend hike in years.

We would like to end with a list of the top dividend stocks held in the Warren Buffett and Berkshire Hathaway portfolio.

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