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Top UBS Dividend Ruler Stocks Continue to Increase Shareholder Payouts

Lee Jackson

In a world of continued low yields, one thing that continues to work for investors is top dividend-paying companies that continue to raise their payouts year in and year out. Not only does that increase the payout to the shareholder, but it is a built-in way to keep up with any increase in the inflation rate.

A new research report from the Dividend Ruler Stocks team at UBS indicates that stocks on their list have increased dividends by an average of 11% thus far in 2014. They also point out that, alongside rising stock prices, market fundamentals continue to improve in lockstep. S&P 500 earnings per share and dividends per share also continue to reach new “record highs,” all positive news for long-term growth and income investors.

We screened the Dividend Ruler list for the stocks raising dividends and currently offering the highest yield.

Aflac Inc. (NYSE: AFL), one of the leading providers of insurance products in Japan, increased its dividend more than 5% this year. Aflac sells supplemental health insurance, which covers out-of-pocket expenses in the case of illnesses or accidents. The company sells individual and group insurance products to more than 50 million people worldwide. With one of the most recognized brands due to the famous “Aflac duck” commercials, the company continues to grow revenue and is a solid long-term investment.

Aflac shareholders are paid a 2.0% dividend. The Thomson/First Call consensus price target for the stock is posted at $68.59. Shares close trading Tuesday at $60.52.

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Dominion Resources Inc. (NYSE: D) is expected to grow the company dividend 7% this year, in line with the past four. The company pulled in operating revenue of $3.2 billion for the most recent three-month period, beating estimates by 4.8%. Although Dominion boosted sales, it kept less than expected as profit. Fourth-quarter adjusted earnings per share clocked in at $0.80, below analyst estimates. Many analysts on Wall Street think that the new EPA bill may actually provide a tailwind for this top utility.

Dominion investors are paid a 3.4% dividend. The consensus price target is $72.07, and Dominion closed Tuesday at $69.87.

Johnson & Johnson (NYSE: JNJ) is the top market cap name in the health care sector and will raise the dividend for shareholders this year for the 51st consecutive year. With everything from medical devices to over-the-counter health items and prescription drugs, Johnson & Johnson remains one of the most diversified health care names on Wall Street.

Investors are paid a 2.7% dividend. The consensus price target for Johnson & Johnson is $109.13. The stock closed trading Tuesday at $103.80.

Northeast Utilities (NYSE: NU) raised its dividend 7% in February, and it is expected to continue to grow dividends between 6% and 8%. The company serves 3.6 million electric and natural gas customers in three New England states. The company notes, “The region’s renewable and carbon mandates are not achievable under the current market framework.” That’s why it is building transmission lines to connect hydro power in Canada to the northeast markets it serves, among other projects. The combination of transmission assets and renewable power will put Northeast Utilities in a solid position when it asks for rate hikes. Both tend to be viewed positively by regulators.

Northeast Utilities investors are paid a 3.4% dividend. The consensus price target for the stock is $47.37. Shares closed trading at $45.83.

Occidental Petroleum Corp. (NYSE: OXY) announced it will continue to grow dividends and expects to begin buying back more shares this year and beyond, a double plus for shareholders. The company finally rewarded activist investors earlier this year when it announced the spin-off its California assets into a separate company. Occidental had faced calls from Wall Street and activist investors for years to split its U.S. business from its international operations, with analysts valuing the assets at a range of between $19 billion to $22 billion.

Shareholders are paid a 2.9% dividend. The mean price target sits at $110.77, while the stock closed Tuesday at $98.35.

United Parcel Service Inc. (NYSE: UPS) recently announced a huge cash-flow quarter and said it expects to continue to raise dividends and keep some “dry powder” for possible acquisitions. The company is a global leader in logistics, offering a broad range of solutions including the transportation of packages and freight, the facilitation of international trade and the deployment of advanced technology to more efficiently manage the world of business. UPS raised the dividend by 8% back in February, highlighting the company’s strong free cash flow and commitment to delivering value to shareholders.

Investors in UPS are paid a solid 2.75% dividend. The consensus price target is $109.43. UPS ended Tuesday at $97.71.

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Despite the hand-wringing by some financial pundits of an imminent stock market debacle, stocks remain the only place for investors seeking fair value to place their capital. With interest rates not rising until next year, top companies raising and paying solid dividends to shareholders will remain a solid investment avenue.