3 Companies That Give Back to Shareholders
Give me a dollar today, and I want two tomorrow.
Since I am a greedy person, I have found three more companies that have continuously increased dividends and managed to regularly buy back shares. Increasing their dividend on a yearly basis, these companies are helping to protect investors against inflation. This increase also allows the yield to remain comparable to the previous year's, if the stock price has risen. By decreasing the number of shares, a company is increasing the ownership stake each share accounts for -- or in other words, your shares now give you a bigger piece of the pie.
My recent greed-satisfiers
Even though Costco's (NAS: COST) founder, Jim Sinegal, has handed over the top spot of his company to longtime employee Craig Jelinek, investors shouldn't expect many changes from the big-box store. Since the company began paying a dividend in 2004, it has increased the payout every year. Jelinek recently told a Motley Fool contributor that most of his investments obviously are in Costco. As investors, we love hearing that our CEOs have a lot on the line when making decisions about the future of a company.
This tells me that the company has never stretched itself to increase a dividend in the past -- and that the dividend, currently yielding 1.2%, is very strong and is unlikely to get cut in the future. Moreover, in the past six years, Costco has cut its share count by almost 10% through buybacks -- another shareholder-friendly move.
The second company that meets my greed is Diageo (NYS: DEO) . It has raised its dividend every year since 1998, due in part to the popularity of some well-known brands: Johnnie Walker, Captain Morgan, and Jose Cuervo. These brands, as well as a few others, help Diageo boast having eight of the top 25 premium spirits brands in the world. All this information tells me that the current 3% dividend yield is safe for the foreseeable future.
If you don't have a buzz yet, maybe this will help. Since 2001, the company has also decreased share counts by 25%! Over the past three years, the outstanding share count has been level. Staying flat is much better than increasing due to the company handing over millions of options to top executives, which we see too often.
Last on my list is Intel (NAS: INTC) , which has raised its dividend every year since 2003. The payout has increased more than tenfold since then, giving it a current yield of 3.3%. The company has a payout ratio of 32%, which means it only pays one-third of earnings back to shareholders. This is a good sign that the dividend still has room to grow.
Intel has also decreased the share count by more than 20% in the past 10 years. By contrast, peers NVIDIA (NAS: NVDA) and Advanced Micro Devices (NYS: AMD) , which don't pay dividends, have have both dramatically increased the number of shares outstanding over the same time frame, with AMD's outstanding shares more than doubling. Also, with Intel's new chips targeting tablets on the horizon, the company should be able to start taking away market share from NVIDIA and AMD and grow its PC dominance into the mobile market.
All three of these companies understand the importance of giving back to their shareholders and continuing to build long-term value. But they aren't the only ones delivering the goods to investors. Discover 11 more superb companies in this special report: "Secure Your Future with 11 Rock-Solid Dividend Stocks."
At the time this article was published At the time this article was written, Fool contributor Matt Thalman did not own shares of any of the companies mentioned above. The Motley Fool owns shares of Intel, Costco, and Diageo. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Costco, NVIDIA, Diageo, and Intel, as well as creating a bull call spread position in Intel and writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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