Investing
5 Top Stocks to Buy Now With Expected Dividend Hikes This Week
October 18, 2021 10:08 am
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, which 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%: a 10% for the increase in stock price and 3% for the dividends paid.
Five top companies that are Wall Street favorites are expected to raise their dividends this week, so we screened our 24/7 Wall St. research universe and found that all are rated Buy at some of the top analysts. While it is always possible that not all four do indeed raise their dividends, analysts expect them to, and generally the data is based on past increases in the firm’s dividend payouts.
It is important to remember, though, that no single analyst report should be used in making a buying or selling decision.
This industry-leading utility is also a solid dividend-paying company. American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.4 million customers in 11 states.
The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. It also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.
Many on Wall Street feel that the stock trades at a discount to its utility peers, and they feel it deserves a premium. Top analysts also think the company may sell generating assets and buy back shares with the proceeds, which also will be accretive.
Shareholders currently receive a 3.55% yield. The company is expected to raise its dividend to $0.79 per share from $0.74.
Morgan Stanley has a price target of $110 on American Electric Power stock, while the consensus target is $97.59. Shares were trading early Monday near $83.
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