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3 Stocks With Bigger Dividends

For dividend investors, the U.S. stock ticker market is starting to look stingy. The S&P 500 index has rebounded more than 40% since early March, while its underlying dividend payments are forecast to fall 23% this year. The result is a yield of just 2.3%.

That’s not as skimpy as the 1.6% yield the index offered over the bubbly decade ended 2007, but it’s well below the average yield of nearly 5% that U.S. stock tickers provided over the past two centuries.

Nonetheless, careful shoppers can still find handsome, growing dividends. Payment trends for the S&P 500 index perhaps paint too grim of a picture, because the index assigns significant weight to the giant banks that have eliminated dividends this year to shore up capital. Viewing all 500 companies as equals, more have increased payments this year than have decreased or cut them.

The three companies below have yields above the index’s 2.3%, recently increased their payments and are what Standard & Poor’s calls Dividend Aristocrats: companies that have boosted their payments in each of the past 25 years.

Clorox

(CLX)
Dividend yield: 3.4%
Dividend increase: to $2.00 from $1.84 in June

Beyond its namesake bleach, Clorox sells Glad trash bags, Brita water filters, Kingsford charcoal, Hidden Valley salad dressing and much more. More than 80% of company sales come from brands that are the No. 1 or No. 2 sellers in their category. Since the products aren’t terribly sensitive to the economy, Clorox is growing despite the current recession. Sales and earnings per share for its fiscal year ended June increased 3% and 17%, respectively.

Supervalu

(SVU)
Dividend yield: 5.2%
Dividend increase: to 70 cents from 69 cents in May

America’s third-largest grocer, Supervalu ran more than $44 billion through its sales registers over the past year, yet it has a stock ticker market value of just $2.8 billion. That’s likely because the company owes a worrisome $8 billion, and sales and earnings per share are expected to fall 5% and 25%, respectively, in its current fiscal year. Simeon Gutman, who covers the stock ticker for Canaccord Adams, an investment bank, recently changed his recommendation to “buy” from “hold,” noting that Supervalu has a new chief executive, is well-positioned for a turnaround and has no major debts coming due until 2011. However, until the company’s financial results show clear signs of improvement, the stock ticker is perhaps best left to speculative investors rather than those living off their dividends. Supervalu reports fiscal first quarter results Tuesday, July 28.

Johnson & Johnson

(JNJ)
Dividend yield: 3.3%
Dividend increase: to $1.96 from $1.84 in April

Johnson & Johnson is three businesses in one. It sells consumer products like Band-Aids, Tylenol, Mylanta antacid; prescription drugs like Risperdal for schizophrenia; and medical devices like sutures and stents. Drugs have been the weak point lately due to increased generic competition, but analysts say the company’s development pipeline looks robust. Earnings per share are forecast to remain largely unchanged this year but resume growth next year. JNJ has negligible net debt, suggesting its dividend is plenty safe.

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