3 blue chips boosting dividends

These big-name stocks saw increased quarterly payouts this week.

By InvestorPlace Sep 24, 2010 10:14AM

By Jeff Reeves, InvestorPlace.com

One good rule of thumb for dividend stock investors is to make sure they purchase companies raising their dividends instead of just keeping them steady -- or, worse, cutting them.

To help income-oriented investors find strong, stable stocks with good yield and consistent dividend increases, are three blue chips that just increased their payouts.

Lockheed Martin Corp (LMT) raised its dividend Thursday. Specifically, the aerospace and defense giant raised its quarterly dividend by 19% from 63 cents a share to 75 cents. This marks the eighth-straight annual increase in its quarterly payout. Lockheed will pay the dividend Dec. 31 to shareholders of record as of Dec. 1. The increase gives the company a new annualized dividend yield of nearly 4.2% at current valuations. Lockheed has struggled recently, with shares down about 10% in the last quarter. LMT continues to cut costs as a tightening federal budget situation is squeezing defense spending. We’ll see if that changes after the midterm elections.

Microsoft (MSFT) announced a boost in its dividend about 23% from 13 cents to 16 cents a share early in the week. The move gives MSFT stock a dividend yield of about 2.6% at current valuations. Though a 23% dividend hike is nothing to sniff at, many shareholders were very disappointed at the move and were expecting a new yield north of 3%. As a result MSFT stock has been punished all week with a 3% decline as of early trading this morning.  The slide comes as just the latest chapter in a brutal 2010. Shares of Microsoft are off nearly 20% this year, compared to a flat market. (Microsoft owns and publishes MSN Money.)

McDonald's (MCD) made big news this week by announcing another dividend increase, becoming the sole U.S. company to have increased its dividend payouts every year since it went public some 34 years ago. The 11% dividend hike from 55 cents to 61 cents gives the fast-food giant a new dividend yield of about 3.3%. The McDonald’s dividend will be paid on Dec. 15 to shareholders of record on Dec. 1. The move isn’t cheap either, and is estimated to cost the hamburger giant an additional $65.4 million a quarter. But that just goes to show you how strong MCD stock is right now. Shares are up about 20% so far in 2010 and show little sign of slowing down.

For four more dividend stocks increasing yield, read the complete report on InvestorPlace.com.

As of this writing, Jeff Reeves did not own a position in any of the stocks named here. You can follow Jeff at twitter.com/JeffReevesIP.

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