20 Bold Companies Raising Dividends Right Into the Recession

The bull market died as the COVID-19 pandemic crushed the economy, and it rapidly turned into a bear market. While many investors have been confused about the massive sell-off and subsequent rapid recovery cycle in less than 90 days, it is not easy to find an investor who is unwilling to admit this a recession. Investors generally have to expect lower earnings ahead, and lower earnings can translate to lower dividends. Some bold and defiant companies are still managing to raise their dividends, even as economic numbers and earnings in general are cratering.

March was a time of panic, with the Dow Jones industrials down almost 40% and the S&P 500 down 35% from their respective highs seen in February. Before the strong April recovery, there was a sudden and growing concern in the stock market that recession-proof utilities, telecoms, consumer products, pockets within technology and other very defensive stock sectors were facing imminent financial losses and declining cash flows that would pressure the safest dividends over the past decade.

Most investors who buy income stocks tend to look at normalized earnings, cash flow, balance sheets and payout ratios to determine a dividend’s safety. The panic in the past 60 to 90 days already has forced more companies to lower or suspend their dividends than all the announced dividend cuts in the past decade combined. The economy is now bad enough and it is hard enough to find strong balance sheets that even Warren Buffett has been too scared to buy, even the best dividend stocks.

The “sell in May and go away” theme may still be arguable, but fears of this recession turning into a depression have been countered by trillions of stimulus dollars and the gradual reopening of the economy. It turns out that the management teams at the highest quality companies know how to protect their earnings and defend their dividends even in very bad economies.

The S&P 500 Dividend Aristocrats are the companies that have managed to raise their payouts for 25 consecutive years or more. They might not be recession-proof and may not all have extreme dividend yields, but they may still attract investors ahead. Some other companies raising their dividends are not among the aristocrats, but any company strongly deserves equal praise at a time when unemployment is reaching depression-era levels and when consumer and business spending had rapidly shifted away from traditional retail.

24/7 Wall St. has gone back to the end of March, which was the “peak panic” period, through the start of May and tracked 20 companies that have boldly defied the crashing economy by announcing dividend hikes. Some of these companies may not be entirely recession-proof, but their executives are trying to tell their shareholders that they have the visibility and strong enough cash flow to get through the recession. Every company should have come to the realization after the first week or second week in March that massive layoffs and furloughs, sending workers home, closures of stores and schools all added up to a crashing gross domestic product and an instant recession.

Here are 20 bold companies that have defied the odds by raising their dividends, after already knowing they were facing a very deep recession.

American Water Works Co. Inc. (NYSE: AWK) announced on April 29 that it was hiking its dividend payout by 10% to $0.55 per common share. This was after it and other utilities saw a major drop in their stock prices after sending notices that customers would not be cut off as the recession fears were growing. Almost all utilities have seen big recoveries in their stock prices since the panic selling ended. American Water Works now has roughly a 1.8% dividend yield. Its management team has committed to hiking its dividend along with long-term earnings growth and a targeted payout ratio of 50% to 60% of net income.

Apple Inc. (NASDAQ: AAPL) has seen its stock price come roaring back above $300 after earnings, and in the last week of April, the iPhone maker hiked its dividend on top of adding yet another $50 billion on its buyback plan. Apple might even have become a $400 stock without the recession. It rewarded investors with a 6% dividend quarterly payout hike to $0.82 per share, and Apple’s dividend yield now is roughly 1.1%.

Chesapeake Utilities Corp. (NYSE: CPK) announced on May 7 that its board voted to increase its quarterly cash dividend to $0.44 per common share from $0.405. The action took its annualized dividend from $1.62 to $1.76 per share, for an 8.6% hike. The gas and electric utility confirmed that it has now paid dividends to its common shareholders for 59 consecutive years, while raising the dividend for its 17th consecutive year, and that it has doubled its dividend in the past 10 years. This small utility has scattered operations throughout Florida, Delaware, Ohio and Maryland, and its press release even stated that the utility company has no affiliation with the troubled Chesapeake Energy. Chesapeake Utilities has a 2.1% yield, based on the new higher payout.

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