3M Co. (NYSE: MMM) saw valuations get stretched after years of gains, and the dividend hike from December 2015 was more than 8% in its payout. That seems a reasonable expectation based on similar EPS growth. The announcement from August was that 3M has now paid a dividend for every year of the past 100 years, with 3M even hiking its dividend during the recession. That $1.11 quarterly payout may be raised to $1.20 or so, but that would represent more than 50% of next year’s EPS.
3M shares were last seen at $180.46, with a consensus price target of $181.85 and a 52-week range of $134.64 to $182.27.
Not only has McDonald’s Corp, (NYSE: MCD) been aggressive in buybacks but it has committed to a higher payout. Its plan was $30 billion to be returned to holders, and it even took on debt to help. Last year’s dividend hike was 5% to $0.89 per share, and having a 3% yield already may not force it to be too aggressive. McDonald’s also pays out more than 60% of its expected earnings as well, and earnings growth is expected to be about 11% in 2017.
Maybe another 5% hike can be expected, but we might not expect it to be too aggressive, based on it already having telegraphed so many changes last year.
Shares closed on Tuesday at $117.25. The consensus price target is $129.45, and the 52-week range is $94.75 to $131.96.
Though Nike Inc. (NYSE: NKE) has delivered less than good news of late, back in November of 2015 it gave shareholders everything they could ask for. We expect a repeat here, with a buyback adjustment to boot. Nike is a Dow stock now, but its dividend yield of just 1.1% remains very unimpressive, even if you consider that its stock pulled back almost 20% from its high. Nike has a massive amount of business overseas, so it cannot count all of its earnings as eligible for dividends. Still, its payout ratio is about 30% on a trailing earnings basis.
Shares of Nike were trading most recently at $57.41, well down from the 52-week high of $68.19 from last November. The consensus price target now is $65.79, and the 52-week low is $51.48.
Though it has paid $0.20 per quarter for the past year, Starbucks Corp. (NASDAQ: SBUX) seems to make barely any noise about raising the dividend. Last year brought a 25% payout hike that was already close to half of its earnings at the time. If that holds true to expectations for earnings growth adjustments in the year ahead, then Starbucks would be a bit more conservative with a 20% hike to $0.24 per quarter.
Just keep in mind that Starbucks has bought back shares too at the same time that its international presence has grown, so it could decide to be more conservative in its hike efforts ahead.
The stock closed most recently at $56.02, with a consensus price target of $66.43 and a 52-week range of $52.63 to $64.00.
Walt Disney Co. (NYSE: DIS) remains in the 10 stocks to own for the decade. The owner of Marvel and Star Wars has seen its shares take a serious breather of late. Disney now pays its dividends twice a year instead of just once. The $1.42 annualized payment comes to a 1.5% yield, which is low while valuations are still somewhat high.
Disney has spent billions making acquisitions in recent years and its payout is about 27% of trailing earnings. Disney’s 12% projected earnings growth in 2016 and an expected 5% growth in 2017 may keep Disney from getting too crazy about dividend hikes. It seems that a semiannual payout of $0.71 per share may be raised to $0.75, or $1.50 per year. That could of course be a higher payout, but let’s not get too far out on expectations.
The stock was last seen trading at $93.80, within a 52-week range of $86.25 to $120.65. The consensus analyst target is $109.52.