Should These 2 Stocks Be Raising Their Dividends?

Posted by D4L | Tuesday, February 18, 2014 | | 0 comments »

For their most recent quarter, clothing giant Hanesbrands (NYSE: HBI) and discount retailer Family Dollar (NYSE: FDO) both raised their dividends substantially. Family Dollar increased its dividend 19.2%, while Hanes upped its payout 50%. I recently wrote an article explaining that many dividend increases are not as good as they seem, but that's not the case with these stocks. Both stocks are examples of companies that should be raising their dividend. Here's why I'm bullish on these dividend increases.

When dividend increases are a smart move: I've often said that I wish investors would stop viewing all dividend increases as a "good idea." Since I've pointed out the opposite end of the spectrum, let's discuss which factors make dividend growth healthy. 1. A stable (even boring) business model and 2. A lack of better options for capital and 3. Low payout ratio. Dividends: Stability matters - These are two companies that might typically be overlooked by dividend investors, because they both pay yields below 2%. The stock market, however, is all about the future. When you consider the stable nature of these businesses, and their low payout ratios, their dividend future is brighter than most. If you're venturing into the world of dividend investing, I would recommend you look for stability, over yield, in your stock purchases.

Source: Motley Fool

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