Investing in dividend growth stocks is not about buying a current high yield, but instead building a high yield-on-cost over time. One of the criticisms I am hearing more often is, "That low yield isn't even covering inflation." This is a very valid concern, if true. The way low many low yielding stocks yields compensate for inflation is by growing their dividend well in excess of the inflation rate.
Below are several companies building an inflation hedge for their shareholders by increasing their cash dividends:
United-Guardian Inc. (UG) researches, develops, manufactures, and markets cosmetic ingredients, personal and health care products, pharmaceuticals, and specialty industrial products. May 12th the company increased its semi-annual dividend 20% to $0.36 per share. The dividend is payable on June 13, 2011 to all stockholders of record as of the close of business on May 30, 2010. The yield based on the new payout is 4.9%.
Delphi Financial Group, Inc. (DFG) is an integrated employee benefit services company. May 12th the company increased its quarterly dividend 9% to $0.12 per share. The dividend is payable on June 8, 2011 to shareholders of record at the close of business on May 25, 2011. The yield based on the new payout is 1.6%.
Portland General Electric Company (POR) is a fully integrated electric utility that serves approximately 821,000 residential, commercial and industrial customers in Oregon. May 11th the company increased its quarterly dividend 2% to $0.265 per share. The dividend is payable on or before July 15, 2011, to shareholders of record at the close of business on June 24, 2011.