After years of a low interest rate environment, many investors have turned to equities not only for the growth potential but also for solid and dependable dividends that help to provide an income stream. What this equates to is total return, which is one of the most powerful investment strategies going.
We like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again, total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%. That is, 10% for the increase in stock price and 3% for the dividends paid.
Four top large-cap companies are expected to raise their dividends this week, so we screened our 24/7 Wall St. research universe and found that all their stocks are rated Buy at some of the top firms on Wall Street. While it is always possible that not all these companies do raise their dividends, top analysts expect them to, and generally the data is based on past increases in the firm’s dividend payouts.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Ameren
While lesser known than some of the other companies, this may be a perfect defensive stock to rotate to. Ameren Corp. (NYSE: AEE) operates as a public utility holding company in the United States engaged in the rate-regulated electric generation, transmission and distribution activities, as well as rate-regulated natural gas distribution and transmission businesses.
The company primarily generates electricity through coal, nuclear and natural gas, as well as renewable sources, such as hydroelectric, methane gas and solar. Ameren serves residential, commercial and industrial customers. It also serves approximately 1.2 million electric customers and approximately 130,000 natural gas customers in central and eastern Missouri.
Shareholders currently receive a 2.73% yield. The company is expected to raise the dividend to $0.575 per share from $0.55.
BMO Capital Markets has a $91 price target on Ameren stock, in line with the $91.31 consensus target. The shares were trading at $81.15 early Monday.
KB Home
This very well-known company could be acquired. KB Home (NYSE: KBH) is one of the largest U.S. homebuilders, with roughly 2% market share. The company builds single-family homes, townhomes and condominiums for first-time, move-up and active adult buyers. It is positioned in roughly 40 markets, with around 70% to 75% of revenues attributable to the West and Central regions. It also provides mortgage services through a joint venture with Nationstar.
Founded in 1957, and the first homebuilder listed on the New York Stock Exchange, the company has built nearly 600,000 homes for families from coast to coast. Distinguished by its personalized homebuilding approach, KB Home lets each buyer choose their lot location, floor plan, décor choices, design features and other special touches that matter most to them.
Shareholders currently receive a 1.54% yield. The company is expected to raise the dividend to $0.21 per share from $0.15, which is a massive 40% increase
The Wedbush price target of $60 compares to the $54.60 consensus target. The stock traded at $38.55 Monday morning.
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