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15 Dividend Stocks To Buy Before The Ex-Dividend Date 07/22/15

15 Dividend Stocks To Buy Before The Ex-Dividend Date

 

Over the past few months, we've highlighted companies with histories of raising their dividends year after year, a quality that adds to the compounding achieved by using Dividend Reinvestment Plans (DRIPs) to efficiently follow a strategy of Dollar-Cost Averaging (DCA). Currently, there are more than 300 companies that have raised their dividend for at least five straight years and offer company-sponsored DRIPs. Owning such companies enhances returns by using reinvested dividends that are steadily rising to generate their own dividends.

 

Enhanced Compounding with DRIPs

 

If you are following this blog, you know that “the miracle of compounding” plays a major role in Total Return, especially over time. Much of that comes from dividends, which provide a steady flow of cash that can be reinvested in more shares of stock. Using a company-sponsored direct investment (or dividend reinvestment) plan, dividends are automatically used to purchase more shares (and fractions) so that every penny of the payout is used to create a growing stake in the underlying company.

 

There are at least two things that can give DRIP investments an extra boost: Owning companies that consistently raise their dividends every year and buying additional shares just before the ex-dividend date.

 

As we have explained, the second enhancement--the ability to purchase new shares just before the ex-dividend date can be easily accomplished by setting up automatic withdrawals from your checking account to fund your DRIP on time to get the extra dividend. A plan’s cash purchasing features are described the company’s DRIP prospectus and can also be found at directinvesting.com. By purchasing just before the Ex-Dividend Date, the shareholder’s new shares qualify for the next dividend that will be paid, usually about a month later, rather than waiting 90 days between quarterly payments.

 

Ex-dividend dates generally recur every three months, so, for example, a company with an ex-dividend date of August 15 would also trade ex-dividend again around the 15th of November, February, and May. So keep the investing cycle in mind if you are trying to add DRIP shares just prior to the quarterly cut-off.

 

Among the companies that have recently declared a dividend increase are Medtronic (MDT) (38 straight years--Ex-Div. Date 9/25/15), National Retail Properties (NNN) (26 years--Ex-Div. Date 10/29/15), J.M. Smucker (SJM) (18 years--Ex-Div. Date 8/12/15), and Cummins Inc. (CMI) (10 years--Ex-Div. Date 8/19/15).

 

As we have said, buying such stocks just before the Ex-Dividend Date gets the “compounding machine” running as soon as possible. You can enhance the value of this strategy by anticipating companies that are about to increase their dividend rates. Since firms typically make such dividend adjustments at about the same time each year, being aware of a company’s history can help to anticipate the next increase. So keeping an eye on the previous year's increase date can be very useful.

 

We are not showing companies with yields of less than 2%.

 

Here's a sampling of candidates that have established a history of steadily rising dividends and have Ex-Dividend Dates coming up in the weeks ahead:

 

Company

Name

Ticker

Symbol

No.

Yrs

6/30

Price

Div.

Yield

MR%

Inc.

Last Yr

Ex-Div

Ann.

Div.

DGR

5-yr

Aqua America Inc.

WTR

23

24.49

2.69

8.55

8/13/14

0.66

7.6

American States Water

AWR

60

37.39

2.28

5.19

8/13/14

0.85

10.4

Marathon Oil Corp.

MRO

5

26.54

3.17

10.53

8/18/14

0.84

6.9

Hershey Company

HSY

5

88.83

2.41

10.31

8/21/14

2.14

11.4

Crane Company

CR

10

58.73

2.25

10.00

8/27/14

1.32

9.5

Dover Corp.

DOV

59

70.18

2.28

6.67

8/27/14

1.60

12.7

MGE Energy Inc.

MGEE

39

38.73

2.92

3.96

8/27/14

1.13

2.6

ITC Holdings Corp.

ITC

10

32.18

2.02

14.04

8/28/14

0.65

7.9

Harris Corp.

HRS

13

76.91

2.44

11.90

9/5/14

1.88

16.2

Altria Group Inc.

MO

45

48.91

4.25

8.33

9/11/14

2.08

8.6

Community Bank System

CBU

22

37.77

3.18

7.14

9/11/14

1.20

5.3

New Jersey Resources

NJR

19

27.55

3.27

7.14

9/18/14

0.90

6.6

Federal Realty Inv. Trust

FRT

47

128.09

2.72

11.54

9/18/14

3.48

4.2

Philip Morris International

PM

7

80.17

4.99

6.38

9/23/14

4.00

12.0

Illinois Tool Works

ITW

40

91.79

2.11

15.48

9/26/14

1.94

7.1

 

 

 

 

 

 

 

 

 

No.Yrs=Consecutive years of higher dividends; MR=Most Recent Percent Increase; Last Yr=Last Year Ex-Dividend Date; Ann. Div=Annual Dividend Amount; DGR=5-yr Dividend Growth Rate.

 

For a list of Dividend Reinvestment Plans (DRIPs) that do not charge fees for investing or reinvesting dividends, click here: http://www.directinvesting.com/search/no_fees_list.cfm

 

Note that it may take several weeks to complete the enrollment in a company's DRIP, so becoming a participant in the plan may mean missing the next dividend, but the important thing to remember is that another dividend is just around the corner, so patience - always important in long-term investing --will pay its own dividend over time.