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Whirlpool Corporation (WHR - Analyst Report), the leading manufacturer and supplier of home appliances is a promising option for investors seeking both growth and income. This Zacks Rank #3 (Hold) company yesterday announced its decision of a dividend hike, following which the shares rose 3.2% to close at $116.78.

Benton Harbor, Mich.-based Whirlpool raised its quarterly dividend by 25% to 62.5 cents from 50 cents a share. The increased dividend, which is the 121st successive quarterly payout, will be paid on Jun 15, 2013, to stockholders of record as of May 17, 2013.

Whirlpool is known for its shareholder-friendly moves. Since 1983, the company has increased its dividend from 22.5 cents to 62.5 cents. The dividend yield based on the new payout and the last closing market price is approximately 2.1%. We believe that its continuous dividend payments and increments reflect the growth potential of its earnings and cash flow generation capabilities.

Whirlpool’s strong balance sheet and cash flows provide financial flexibility to the company for taking shareholder-friendly initiatives, R&D investments and global business expansions. During 2012, it shelled out $155 million on cash dividends. Cash and cash equivalents stood at $1,168 million at the end of the fiscal, while it generated $696 million of cash from operational activities. We remain encouraged by Whirlpool’s strong cash position and its ability to service long-term debts.

Other companies, which recently increased dividend, include The TJX Companies Inc. (TJX - Analyst Report), by 26.0% to 14.5 cents, Rockwell Automation Inc. (ROK - Analyst Report) by 11.0% to 52 cents, and The Bank of New York Mellon Corporation (BK - Analyst Report) by 15% to 15 cents.

We believe that dividend hikes not only enhance shareholder’s return, but raise the market value of the stock as well. Through dividend raises, companies persuade investors to either buy or hold the scrip instead of selling them. Looking ahead, Whirlpool remains confident of its growth potential, suggesting enhanced value for shareholders via dividend payout.

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