4 Dividend Growth Stocks to Buy With Rising Payout Ratios

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Despite the fact that the Federal Reserve looks to be raising the fed funds rate either this month or in July, there is one inescapable fact. Interest rates are still at the lowest levels in more than 50 years, and even with an increase similar to last December’s, the rate still will be well under 1%. While that remains a plus for consumers and borrowers of all shapes and sizes, it has been a huge burden on income investors who look for safe and secure streams of interest or dividend income.

In a new and outstanding research piece, Jefferies combs through the market in search of companies that have rising payout ratios for the past three reported years, and that are expected to continue that trend over the next two fiscal years. We reviewed the list they presented, looking for the stocks that Jefferies has rated at Buy. We found four that look attractive now.

Kohl’s

This top retailer has been pounded and could be offering investors a solid entry point. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States. It offers private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices. As of March 03, 2015, it operated 1,162 department stores in 49 states.

The company recently got a ton of free social media marketing and advertising when a Texas mom’s crazy internet post wearing a Chewbacca mask that she bought in a bargain bin at the store went incredibly viral. The clip has been seen by 135 million people as of Monday morning, making it the most watched video ever on Facebook. Kohl’s sent representatives to her house with a trove of gift cards and other items, and of course, more Chewbacca masks for the kids. Only 8.8% of funds own the stock.

Kohl’s shareholders are paid a huge 5.55% dividend. The Jefferies price target for the stock is $47, and the Thomson/First Call consensus price target is $41. The stock ended Tuesday’s trading at $36.04 a share.

HP

This is the printer and personal computer businesses of the old Hewlett-Packard. HP Inc. (NYSE: HPQ) provides products, technologies, software, solutions and services to individual consumers and small- and medium-sized businesses, as well as to the government, health and education sectors worldwide.

The company’s Personal Systems segment offers commercial personal computers (PCs), consumer PCs, workstations, thin client PCs, tablets, retail point-of-sale systems, calculators and other related accessories, software, support and services for the commercial and consumer markets.

The Printing segment provides consumer and commercial printer hardware, supplies, media, scanning device and software and services, as well as LaserJet and enterprise, inkjet and printing, graphics, and software and web services.

HP investors are paid a very solid 3.71% dividend. Jefferies has a $14.50 price target for the stock, and the consensus estimate is set at $13.87. The shares closed most recently at $13.38.