Dividends are a big part of investors’ portfolios, whether they realize it or not.
Looking at the S&P 500 over the last year, the index is up 9.3%. Now, if you look at the total return of the S&P 500, which includes stock price appreciation and dividends, the return is 11.6%.
And this isn’t just a one-time fluke. Over the last 10 years, the S&P 500 is up close to 76%. That’s an annualized 5.8% return. Meanwhile, the total return of the S&P 500 has been 117% over that same period, or an annualized 8%.
Think about it another way: The difference between the S&P 500 return with and without dividends would have been over $400,000 on a $1 million portfolio over the last decade.
So, while that 2% or 3% dividend might not seem like much, it adds up over time and in a big way.
But it isn’t about just picking any dividend stocks. First, there has to be some reasonable assurance that the company will be able to continue paying the dividend. And second, the company has to consistently reward shareholders with dividend increases.
In that vein, we’ve done the heavy lifting for you. After digging through the stocks upping their dividends this month, we’ve picked out the top five.
No. 1 Dividend Increase for April: General Mills (NYSE: GIS)
General Mills is upping its quarterly dividend a cool 7% to 44 cents per share. The food company has upped its dividend for 11 straight years, with its current dividend yield up to 3.1%
Most investors know General Mills for its Big G cereals, but it also owns the Betty Crocker, Hamburger Helper, Progresso and Yoplait brands, among others. Its Yoplait yogurt is one of its prized assets, where the company is able to capitalize on the fast-growing yogurt market.
Then there’s its recent purchase of natural and organic foods company Annie’s. This should be a key growth avenue for the company. General Mills’ stock is also a bit more attractive from a valuation perspective when compared to major peers like Post Holdings (NYSE: POST) or Kraft (NASDAQ: KRFT).
Shares trade ex-dividend April 8.
No. 2 Dividend Increase for April: General Dynamics (NYSE: GD)
General Dynamics will be upping its dividend by 11% to 69 cents a share. Its dividend yield comes in at 2.1%, and the company has upped its dividend for 17 straight years.
In terms of its business, General Dynamics is the fourth largest military contractor in the world. But it also has a an impressive corporate jet business. Its jet business continues to grow, helping smooth out any interim issues related to defense budgeting spending.
General Dynamics is also the cheapest of the major defense players, trading at a price/earnings ratio (based on next year’s earnings estimates) of less than 15.
Shares trade ex-dividend April 8.
No. 3 Dividend Increase for April: AbbVie (NYSE: ABBV)
AbbVie is increasing its dividend to 51 cents – a 4% increase. But AbbVie also has the highest dividend yield on our list, currently at 3.6%.
Recall that AbbVie spun off from Abbott Labs (NYSE: ABT) in 2013. AbbVie operates as a pharmaceutical business, with its key drug being Humira (used for rheumatoid arthritis). Sales for Humira are still going strong, growing nearly 18% to $12.5 billion last year.
But beyond Humira, AbbVie has a strong pipeline, and its recent purchase of Pharmacyclics (NASDAQ: PCYC) will further diversify its revenues. The purchase gives AbbVie a presence in blood cancer drugs, where Pharmacyclics already has three drugs generating over half a billion dollars collectively.
Shares trade ex-dividend April 13.
No. 4 Dividend Increase for April: Colgate-Palmolive (NYSE: CL)
Colgate-Palmolive is upping its quarterly dividend by 5.5% later this month to 38 cents. Its dividend yield is right at 2.1% and Colgate-Palmolive is another dividend aristocrat, having upped its dividend for 51 straight years.
This consumer products company needs no introduction, but it’s worth noting that it sells its oral and personal care product in over 200 countries. Like many multi-nationals, Colgate-Palmolive has been facing forex pressures, but its growth in emerging markets like China and Brazil remains strong.
Shares trade ex-dividend April 20.
No. 5 Dividend Increase for April: Hasbro (NASDAQ: HAS)
Hasbro has a 7% quarterly dividend increase to 46 cents scheduled for the end of the month. Its dividend yield is right at 2.9%, and the company has five years of consecutive dividend increases under its belt.
Hasbro is a toy maker, with various brands that include My Little Pony, Monopoly and Transformers. Part of the company’s recent focus has been on movie and studio partnerships. Thanks to this, there will be a rollout of Princess and Frozen merchandise in 2016 via a deal with Disney (NYSE: DIS).
Then there’s digital gaming, which Hasbro has been experimenting with. One key is its plan to cut costs as it focuses on other areas of the toy market. This includes cutting its workforce by 10% and consolidating its facilities, which should help keep margins up as it pivots.
Shares trade ex-dividend April 29.
Dividends for Every Month of the Year
If you’re looking for just one dividend stock to round out your income stream, consider a little-known company that pays out dividends 12 months of the year.
Click here to see the full details of this company in my Dividend Calendar…