While September 30 marks the end of the month, it is also the end of the third quarter of 2019. The U.S. economy has seen its share of hits to faster growth as global growth continues to slow and as the U.S. trade war with China continues to weigh on companies. What is interesting is that it already was assumed earnings growth was coming down for the S&P 500 as a whole, so it’s a time when companies should be focused on how much they pay out in dividends and use for share buybacks. After all, what if all those overused recession headlines come true.
24/7 Wall St. noticed 11 key dividend hike announcements in September from large-cap companies that were too big to ignore. A threshold for a high dividend hike is not universally considered to be a 10% payout hike here, but many companies are offering 10% dividend payout hikes. Some are offering far more generous payout boosts than that.
Investors love dividends. These can supplement retirement, or they can be reinvested along the way to retirement to act as a pile-on for returns in top of long-term gains. Dividends also can help buffer some pressure to sell shares that have been held for long periods.
Whether or not a recession will really arrive, the consensus estimates from many economic sources have pointed to slower earnings growth. Companies know that once they hike a dividend, they will probably be criticized quite sharply and punished by shareholders if they have to announce a cut in a dividend payment. This means they have to pay close attention to earnings and revenue forecasts and what they will mean for their bottom-line in 2020 and the years after that.
These are not the only dividend hikes from September, but here are 11 dividend hikes announced by large-cap companies in September that looked too large to ignore.
American Express Co. (NYSE: AXP) raised its quarterly payout to $0.43 per share from $0.39. That is a 10.3% hike, and the new payout and a $118.59 share price bring a 1.45% yield. While that might seem impressive compared with the huge banks, Refinitiv’s consensus target price of $132.63 implies that Amex may be undervalued. It still blows away the yields offered by Visa and Mastercard.
Honeywell International Inc. (NYSE: HON) announced a 10% increase in the company’s regular annual cash dividend on September 27, taking it to $3.60 per share from $3.28 per share. The company touted its aggressive capital deployment strategy in support of the hike, and this was its 10th double-digit percentage increase since 2010. With a $168 share price recently, Honeywell yields about 2.15%, and the average of analysts on Wall Street see about 10% upside for the shares. That said, Citigroup sees about 20% upside.
Innovative Industrial Properties Inc. (NYSE: IIPR) raised its dividend payout by 30% on September 13, taking its hike to $0.78 from $0.60 per quarter. With a recent share price of about $94, the new dividend yield will be approximately 3.32%. That may not seem massive considering some real estate investment trusts have even higher yields, but Innovative Industrial Properties is a REIT targeting the regulated U.S. cannabis industry with properties that are leased to experienced state-licensed operators for their regulated medical-use cannabis facilities.
Lockheed Martin Corp. (NYSE: LMT) authorized a fourth-quarter 2019 dividend of $2.40 per share, which is a $0.20 per share hike that represents a payout hike of 9%. That generates a 2.47% yield, based on a recent $388.00 share price. Lockheed Martin also added $1 billion for share buybacks. This September 26 dividend hike was announced despite disappointing earnings this summer.
The giant defense contractor handily outyields the 30-year Treasury, at a time when global tensions are hot, and the $396.60 consensus target price leaves some upside. The street-high target price is up at $440.