Investing

9 Great Companies That Can Raise Their Dividends for the Next Decade

The company may not be the growth engine of years past, but Warren Buffett is the largest shareholder here. Even if earnings do not grow by very much in the next five years, American Express should be able to deliver modest dividend hikes — or aggressive ones if earnings growth resumes.

American Express shares recently were trading near $77.00. The stock has a consensus analyst price target of $83.40 and a 52-week trading range of $71.71 to $94.89. The company has a total market cap of $76.9 billion.

American Water Works

American Water Works Co. Inc. (NYSE: AWK) is the best water utility for investors to invest in for its diverse geographic footprint. It serves about 15 million people and has a presence in 47 states and one province in Canada. American Water Works has seen its shares appreciate to the point that its stock price now roughly matches the analysts’ price targets, but the stock almost never pulls back 10%.

It has also committed to broad dividend hikes for years into the future and was refreshed on our list of stocks to own for the next decade. 24/7 Wall St. first started highlighting this water utility back in the low $20s and its dividend is 75% higher than in early 2009. Its payout ratio is just over 50% of stated operating earnings.

Shares of American Water Works were recently trading at $58.38, with a consensus price target of $58.64 and a 52-week range of $48.36 to $58.63. The total market cap is $10.5 billion.

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Boeing

Boeing Co. (NYSE: BA) may have at-risk revenues through time on the defense and space businesses, but Boeing has entered into the sweet spot of the growth cycle, and it could have a liftoff for the next 10 or even 20 years with new airplanes and with the coming replacement cycle of existing planes. Boeing pays out about half of its stated operating earnings, but the normalized earnings of $7.50 to $8.00 per share could easily rise to $10.00 in the years ahead, after it recoups its R&D and capital spending.

This could all point to a Dreamliner of a dividend growth engine ahead, for what is only a 2.6% yield currently. Just keep in mind that the doubling of the dividend in the past four years was more aggressive than expected, and we do not expect a repeat of that same growth.

Boeing shares recently closed at $137.60. The consensus analyst price target is $163.05, and the 52-week range is $115.14 to $158.53. Boeing’s total market cap is $93.2 billion.

Home Depot

Home Depot Inc. (NYSE: HD) was stuck in the mud for years, but its recovery has come at a time when building of new homes has been muted. Homeowners also still have been slow to remodel or upgrade their existing homes, and this could point to clear skies ahead.

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Home Depot has nearly doubled its dividend over the past four years and the dividend has almost quadrupled since prior to the hike right before the recession kicked into gear. The DJIA stock pays out about 45% of current operating earnings, and earnings per share growth of 10% on 5% revenue growth should allow for dividend hikes to continue at a modest pace to boost that current 2% yield.

Shares of Home Depot recently closed at $122.74, with a consensus price target of $131.61 and a 52-week range of $89.77 to $123.80. The company has a total market cap of $157.5 billion.