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Tickers in this Article: KR, XRT, TXN, SMH, IBOC


Amid renewed talk of a double dip recession, European debt woes and the Fed's fear of deflation, it's nice to see a few companies that feel their earnings are strong enough to raise annual dividends - and especially now, in the off season, so to speak, for the corporate world.

Dividend declarations are usually timed to coincide with reporting season when the focus is on earnings and more sizzle can be added to an already heated investment environment. It appears, however, that these three firms saw little need to wait. And that indicates a confidence in coming earnings, in so far as the added spice of a dividend announcement won't be necessary to keep their stock price buoyant. (For related reading, see Your Dividend Payout: Can You Count On It?)

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It should also be a green light to investors, as it heralds a general sense of stability and confidence that earnings and operations will be sufficient going forward to maintain the payout for the long haul. And that's key. Companies that have to cut or suspend dividend payments are regularly thrashed by the market, their stock price bludgeoned to a fraction of its former worth.

Hereunder are three companies that, last week, increased their annual dividend by at least 8%.

Retail Rising
The Kroger Company (NYSE:KR) is in the retail sales business, operating nearly 2,500 supermarkets, 777 convenience stores and 374 jewelry stores. Last week, the company raised its annual dividend by 10.5%, its fourth straight annual increase since it began paying a dividend in 2006. It now pays 1.9% annually. Year to date, the shares are up 6.7%, a weaker showing than the broad retail sector, which is up 17% since the year began, as represented by the SPDR S&P Retail ETF (NYSE:XRT).

Longhorn Payouts Grows Further
Texas Instruments' (NYSE:TXN) stock is up 2.3% in 2010, a better showing than the Semiconductor HOLDRs ETF (NYSE:SMH), of which it is a component. That ETF is down just flat on the year. TXN just raised its annual payout to 13 cents per share, a hike of 8%, bringing the annual yield to 1.95%.

International Bancshares Corporation (Nasdaq:IBOC) provides commercial and retail banking services to over 100 communities in Texas and Oklahoma. The firm upped the annual dividend last week by 11.8% to 19 cents per share, producing a yield of 2.3% per annum. IBOC shares trade with a P/E of 9.0.

The Bottom Line
When the going is still rough and companies see fit to raise dividends, every investor should be adding to his watchlist.

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