Analysis of the recent results seasons by investment bank CIMB has showed that dividend income investors were the real winners this year. Overall, there was a 5.2% gain in revenue for ASX-listed companies. However, dividend growth trumped that with a 7.0% increase. Earnings per share growth found the middle ground with a 6.3% rise.
The statistics bring up some concern that near future dividend growth may be pressured if earnings don't grow at a higher rate. Companies may be on the generous side with dividends this season, so investors will want to focus on large-cap stocks that can support further dividend increases. Stable and growing dividend income should be the mantra for all long-term investors.
Here are four companies that had ample dividend increases and could be strong income stocks over the coming years.
Australia's largest bank Commonwealth Bank of Australia (ASX: CBA) raised its final dividend to 218 cents per share, up 9% on the previous final dividend. That brought the full year dividend payment to 401 cps, for a 10.1% increase. With a 15.1 price-earnings ratio that is at the top of its past average PE range, the stock isn't cheap, but shareholders already holding stock were rewarded handsomely. The dividend yield is 5.1% fully franked.
Telecom giant Telstra Corporation Ltd (ASX: TLS) maintained its reputation of being a rock-solid dividend payer and raised the ante by one cent to announce a 15 cps final dividend. All up that makes 29.5 cps for the full year. Telstra's sale of some assets like a 70% stake in Sensis helped bolster this year's earnings. Still to come, though, is the potential growth its overseas ventures will achieve. Watch this space closely as it becomes a bigger regional player in South East Asia. Its yield is 5.4% fully franked.
Rio Tinto Limited (ASX: RIO) hit a big target this year by raising its annual iron ore production capacity over its goal of 290 million tonnes. Despite weak iron ore prices under $100/tonne, higher export volumes helped boost half year underlying net profit 21% to $5.1 billion. Its interim dividend climbed 15% to 96 cps. The challenge this next year is to get production capacity above its next target level of 320 million tonnes, as well as continue reducing capex to open up margins. One hurdle will be future iron ore prices, yet if they are at a trough now that bodes well for the future. The stock offers a 3.5% fully franked yield.
Wesfarmers Ltd (ASX: WES), the retailing and industrial conglomerate had a regular revenue increase, yet net profit rose 18.9%. Proceeds from selling off its insurance businesses helped earnings and has freed up capital that the company can deploy for acquisitions that it may be considering now. A 10 cent per share special "centenary" dividend was declared on top of the 105 cps final dividend. The company also surprised the market with plans for a $1 per share capital management distribution. That caused a new all-time high of $45.88 to be hit. It has a fully franked 4.5% yield.
