11 Dividend Hikes From September Too Large to Ignore

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Masco Corp. (NYSE: MAS) announced on September 17 that it would hike its dividend payout by 12.5%, up to $0.135 per share from $0.12 per share. While this is only a 1.3% dividend yield that is still less than the 10-year Treasury, Masco has ample room to raise this payout further because its simultaneous announcement of approving up to $2 billion for additional share buybacks is one-sixth of its entire $12 billion market cap.

McDonald’s Corp. (NYSE: MCD) continued to deliver on its shareholder capital return ambitions with an 8% dividend hike. The new quarterly dividend of $1.25 per share, part of its Velocity Growth Plan driving long-term value, is close to a 2.35% yield, based on a $213.16 share price. On top of that outyielding the 30-year Treasury, this marked the 43rd consecutive year that McDonald’s has raised its dividend. The consensus target price of $233.00 also implies close to another 10% upside in the coming year, and presumably the company will manage to grow in the decade ahead.

Also, McDonald’s appears to be on its way to joining the list of top companies hiking their dividends for 50 consecutive years.

Microsoft Corp. (NASDAQ: MSFT) kept up with its pace of dividend hikes with an 11% increase in its payout. On September 18, the software and cloud giant hiked the quarterly dividend to $0.51 per share from a prior $0.46. While his is close to a 1.50% dividend yield and under the 10-year Treasury, Microsoft’s stock has gained 38% so far in 2019. The board also approved a new share repurchase program for up to $40 billion to be used in share repurchases. Microsoft is valued at $1.05 trillion at this point.

One benefit that has helped Microsoft is its dominance in the ESG theme (covering environmental, social and governance issues), and all that cloud growth has kept shareholders more focused on it even over Amazon.

Royal Caribbean Cruises Ltd. (NYSE: RCL) is supposed be very economically sensitive due to its travel-focus in the cruise industry, so it might not want to be super-aggressive on a dividend hike as all those recession fears are growing. Royal Caribbean announced an 11% hike in its payout on September 6, to $0.78 from $0.70 per share. Based on a recent $108 share price, that represents close to a 2.9% yield for new investors. This is also still handily under its consensus target price of $141.47.

State Street Corp. (NYSE: STT) has sold off handily from its highs due to yield curve concerns and lower Treasury yields in general. That said, the custodial bank raised its payout by 10% to $0.52 per share (from $0.47). The $59.80 share price is down from a 52-week high of $87.79 (and from $106.00 at the end of 2017), and it will represent close to a 3.50% yield. Collecting more than a full point above the 30-year Treasury yield should add some comfort as the bank looks to recover its lost ground. Also, the consensus target price is $63.00.

Texas Instruments Inc. (NASDAQ: TXN) turned on nearly a 17% hike to its quarterly payout. This company makes chips for just about everything, many of which may come with zero tariff concerns over time. The dividend hike to $0.90 per share per quarter (from $0.77) and a $127.14 share price will generate a 2.83% yield for new investors. With a consensus target price of $129.19, Merrill Lynch just pointed out that free cash flow here makes the shares worth $150 rather than its prior $145 price objective.

U.S. Bancorp (NYSE: USB) announced a 13.5% payout hike on its dividend on September 17, taking that quarterly payout to $0.42 per share from $0.37. While this is a high dividend hike for such an established bank, investors should keep in mind that this was the formal hike after the Federal Reserve approved its 2019 capital plan at the end of June. That said, U.S. Bancorp now yields just over 3% for new investors at a $55.50 level.

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