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 that 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 large-cap 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 by some top analysts. While it is always possible that not all of them do indeed raise their dividends, analysts expect them to, and the data is based generally 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.
Analog Devices
This stock could very well continue to benefit from the increase in information technology and 5G spending. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal-processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide.
The company offers signal-processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.
Analog Devices has among the best end-market exposure, with high communications and aerospace/defense market exposure, in addition to offering investors a powerful 5G content growth story. Plus, acquisitions over the past few years like Linear Technology and Hittite Microwave should provide revenue and additional cost synergies that are still coming.
Analog Devices stock investors currently receive a 1.79% yield. The company is expected to raise the $0.68 per share dividend to $0.76. BofA Securities has a Wall Street high price target of $220. The consensus target is $207.56, and shares closed on Friday at $153.90.
Foot Locker
Shares of this athletic shoe retailer have rallied from lows and look ready to move higher. Foot Locker Inc. (NYSE: FL) is an athletic footwear and apparel retailer in North America, Europe and Asia. The company’s banners include Foot Locker, Champs Sports, FootAction, Kids Foot Locker, Lady Foot Locker, SIX:02 and Eastbay.
Many Wall Street analysts feel that consumers are bearing price increases from the top companies like Nike, Reebok and Adidas. They also say that currently athletic apparel and footwear companies are continuing to see higher gross margins and return on invested capital, which some think will be a source of multiple expansion.
Shareholders receive a 2.74% yield. Analysts expect the dividend to rise to $0.38 per share from $0.30. The Credit Suisse price target on Foot Locker stock is $70, while the consensus target is just $60.50. The shares closed on Friday at $43.85.
Garmin
This top company’s stock has had an incredible five-year run, and the recent pullback is a solid opportunity for growth and income investors. Garmin Ltd. (NYSE: GRMN) is engaged in the provision of navigation, communications and information devices, most of which are enabled by global positioning system (GPS) technology. It operates through the following segments.
The Outdoor segment offers products designed for use in outdoor activities such as outdoor handhelds, adventure watches, golf devices, dog tracking and training devices, Garmin Connect and Garmin Connect Mobile, and Connect IQ. The Fitness segment involves products designed for use in fitness and activity tracking such as running and multisport watches, cycling computers, Power Mete, and safety and awareness and activity tracking devices.
The Auto segment offers products designed for use in the auto market, such as personal navigation devices, original equipment manufacturer solutions and cameras. The Aviation segment provides solutions to aircraft manufacturers, existing aircraft owners and operators, and government/defense customers.
Shareholders receive a 1.07% dividend, but the $0.67 per share dividend is expected to rise to $0.72. Deutsche Bank’s $170 price objective is less than the 52-week high of almost $179 but well about the most recent share price for Garmin stock of $123.23.
Humana
Earnings are expected to continue to grow as the U.S. population is aging and this company is a big player in Medicare plans. Humana Inc. (NYSE: HUM) engages in the provision of health insurance services.
Its Retail segment consists of products sold on a retail basis to individuals, including medical and supplemental benefit plans such as Medicare and state-based Medicaid contracts. The Group and Specialty segment contains employer group fully insured commercial medical products and specialty health insurance benefits marketed to individuals and groups, including dental, vision, military services and other supplemental health and voluntary insurance benefits.
The Healthcare Services segment offers services such as pharmacy solutions, provider services, clinical care, predictive modeling and informatics services to other Humana businesses, as well as external health plan members, external health plans and other employers.
Investors receive a dividend of 0.66%. A huge dividend raise is expected, from $0.70 per share to $0.78. The $525 SVB Leerink target price compares with the $491.96 consensus target for Humana stock and last Friday’s closing price of $423.97 a share.
Louisiana-Pacific
This top stock is a solid choice for investors looking for ideas within the fast-growing homebuilding segment. Louisiana-Pacific Corp. (NYSE: LPX) designs, manufactures and markets products for the new home construction, repair and remodeling and outdoor structures markets.
Its Siding segment offers wood-based sidings, trim, soffit, fascia, and pre-finished lap and trim products in a variety of patterns and textures. The Oriented Strand Board segment manufactures and distributes oriented strand board structural panel products. The Engineered Wood Products segment includes laminated veneer lumber, laminated strand lumber, I-joists and other related products. The South American segment covers the distribution of products in South America and certain export markets.
Shareholders currently receive a 1.06% dividend. The $0.18 per share is expected to rise to $0.20. BMO Capital Markets has set its target price on Louisiana-Pacific stock at $82. The consensus target is higher at $84.50, but Friday’s final trade was at $68.04 a share.
Five top blue-chip companies that all are rated Buy across Wall Street and are expected to lift the dividends they pay to shareholders. 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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