It is no secret that investors love dividends, and companies raising dividends are prized above and beyond others. The bull market is now seven and a half years old, and investors have grown to expect their top dividend stocks will make sure they keep growing those dividends. It is important to remember that dividends account for close to half of all shareholder returns through time as well.
Companies with safe dividends that can be raised and raised repeatedly are given more attention than companies that have manufactured earnings growth and stretched balance sheets. With the fourth quarter now about three weeks away, 24/7 Wall St. wanted to identify the companies from which we expect solid dividend news in the fourth quarter. We see at least these eight companies, most of which are blue chip stocks, to announce dividend hikes in the next 90 days or so.
Some of these hikes may not formally be paid until the first quarter of 2017, but that is normal. An effort also has been made to keep a focus on companies with a dividend history and to actually forecast how much each dividend may go up. We have considered adjusted earnings per share (EPS), foreign earnings dominating domestic earnings, payout ratios and even basic earnings valuation in this review.
Most Dow Jones Industrial Average stocks raise dividends. After all, they became Dow stocks for a reason. Dividends versus peers also mattered, as that could create less pressure to raise a payout. Here are eight companies likely to be on the dividend hike warpath with key dividend hike announcements before the end of 2016.
AT&T Inc. (NYSE: T) has been raising dividends for so long that it is easily expected to be another dividend hiker before the end of the year. Most likely its hike will come in December, and a penny hike (to $0.49 from $0.48 per quarter) is likely all we should expect as telecom dividend hikes are less than in years past.
Interestingly, its DirecTV acquisition was likely to bolster the AT&T dividend, and the former Dow Jones Industrial Average component still outyields all 30 Dow stocks, even after Verizon just fired another shot in the dividend hike wars.
Shares of AT&T were last seen trading at $41.23, with a consensus analyst price target of $42.83 and a 52-week trading range of $31.85 to $43.89.
Generally Boeing Co. (NYSE: BA) also hikes its dividend toward the end of the year, but those payouts do not come until after the start of each year. Boeing already was one of the largest buybacks in the Dow, and 2016 earnings are weighed down by slower global growth and charges related to its plane programs. If Boeing is certain it can rekindle earnings growth like analysts anticipate in 2017, then it may deliver a better hike than we expect. That $1.09 quarterly payout from Boeing may go up to $1.15, with a wait and see being signaled ahead.
Boeing shares closed most recently at $132.99, within a 52-week range of $102.10 to $150.59. Its consensus price target is $149.27.
Another dividend hike is expected from Intel Corp. (NASDAQ: INTC) in November. Its stock is close to a 52-week high already, but Intel has been noted for its cash overseas before. This might make a big boost unexpected, even if it is not even at half of its income being paid out. Another consideration is that Intel already yields an impressive 2.9% for its common holders. 24/7 Wall St. would put one caveat out there: Intel delivered a larger hike than we expected last year, so maybe we are just too conservative on estimates.
The most recent close at $36.56 compares to Intel’s consensus price target of $37.90 and a 52-week range of $27.68 to $36.60.