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.
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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 five 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.
AbbVie
This is one of the top pharmaceutical stock picks across Wall Street, and 34% of fund managers own the shares. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.
One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so in June of 2019 it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of last year.
AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.
Shareholders receive an already stellar 4.76% yield. The company is expected to raise the dividend from $1.40 per share to $1.42.
SVB Leerink recently lifted its price target to $140 from $128. The consensus target for AbbVie stock is lower at $127.01. The stock is trading above $108 early Monday.
Amphenol
This is a solid pick for growth investors, as it is a favorite long-term idea across Wall Street. Amphenol Corp. (NYSE: APH) primarily designs, manufactures and markets electrical, electronic and fiber-optic connectors in the United States and internationally.
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The Interconnect Products and Assemblies segment offers connector and connector systems, including fiber-optic, harsh environment, high-speed and radio frequency interconnect products, as well as antennas. It offers power interconnect products, busbars and distribution systems, as well as other connectors. It also provides value-add products, such as backplane interconnect systems, cable assemblies and harnesses, and cable management products. Other products include antennas, flexible and rigid printed circuit boards, hinges, molded parts and production-related products.
The Cable Products and Solutions segment offers coaxial, power, and specialty cables; cable assemblies; and components, including combiner/splitter products, connector and connector systems and fiber-optic components. The company sells its products through its sales force, independent representatives and a network of electronics distributors to original equipment manufacturers, electronic manufacturing services companies, original design manufacturers and service providers in the automotive, broadband communication, commercial aerospace, industrial, information technology and data communication, military, mobile device and mobile network markets.
Investors in Amphenol stock currently receive a 0.75% yield. The $0.145 per share dividend is expected to rise to $0.17.
The Jefferies price target is $88, well above the consensus target of $79.92. The shares were trading below $79 Monday morning.
24/7 Wall St.Boise Cascade
This is one of the premier companies in the building materials business. Boise Cascade Co. (NYSE: BCC) manufactures wood products and distributes building materials in the United States and Canada. It operates in two segments.
The Wood Products segment manufactures laminated veneer lumber and laminated beams used in headers and beams; I-joists for residential and commercial flooring and roofing systems, and other structural applications; and structural, appearance and industrial plywood panels. This segment’s products are used in new residential construction, residential repair-and-remodeling markets, light commercial construction and industrial applications. It sells its products to wholesalers, home improvement centers, retail lumber yards and industrial converters.
The Building Materials Distribution segment distributes a line of building materials, including oriented strand boards, plywood and lumber; general line items, such as siding, composite decking, doors, metal products, insulation and roofing; and engineered wood products. This segment sells its products to retail lumber yards, home improvement centers and specialty distributors.
The current dividend yield is 0.70%. An increase by a penny per share to $0.11 is projected.
D.A. Davidson has a $75 price target. The consensus target for Boise Cascade stock is $63.80, and the shares were trading below $59 early Monday.
Oshkosh
This stock may hold some of the largest upside potential for investors. Oshkosh Corp. (NYSE: OSK) designs, manufactures and markets specialty vehicles and vehicle bodies worldwide.
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The company’s Access Equipment segment likely would benefit the most from an infrastructure build as it provides aerial work platforms and telehandlers for use in various construction, industrial, institutional and general maintenance applications. This segment also offers rental fleet loans and leases, and floor plan and retail financing through third-party funding arrangements; towing and recovery equipment; carriers and wreckers; equipment installation services; and chassis and service parts sales.
Shareholders currently receive a 1.25% yield. The expected dividend hike is by three cents per share to $0.36.
The $135 Morgan Stanley price target compares with the $126.24 consensus target. Oshkosh stock traded near $105 on Monday.
Visa
This top credit card issuer is becoming a huge leader in digital pay. Visa Inc. (NYSE: V) operates the world’s largest retail electronic payments network. The company provides processing services and payment product platforms, including consumer credit, debit, prepaid and commercial payments, that are offered under Visa and related brands.
According to Nielsen estimates, the company is the largest global credit network (as measured by volume) and the second-largest global debit network. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products.
Shareholders currently receive a 0.55% yield. The company is expected to raise the dividend to $0.36 per share from $0.32.
Truist Securities has set a $275 price target on Visa stock. The consensus target is just higher at $277.56, and the shares on Monday were trading near $233.
These five top companies are expected to lift the dividends they pay to shareholders, and their stocks are rated Buy across Wall Street. Not only is increasing dividends and returning capital to investors important, but it also shows that the company is doing well and has the earnings and cash flow strength to increase the payouts.
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