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 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.
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 at some of the top firms on Wall Street. While it is always possible that not all of them do indeed raise their dividends, top analysts expect them to. 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.
Best Buy
The need for the electronics and gear to set up a “work from home” office has been a huge tailwind for this leading retailer. Best Buy Inc. (NYSE: BBY) is the top specialty retailer of consumer electronics. The company operates about 1,000 stores in the United States, primarily big-box Best Buy locations, and over 200 stores in Canada and Mexico.
The company also offers a variety of high-margin services, through its Geek Squad and Magnolia home theater channels, as well as connected health and emergency services for seniors through its purchase of GreatCall.
Shareholders currently receive a 2.92% dividend. The company is expected to lift the $0.70 per share dividend to $0.80. BofA Securities has a Buy rating and a $175 price target on Best Buy stock. The consensus target is just $124.10, and shares traded early Monday at $95.15.
24/7 Wall St.Domino’s Pizza
This stock has been on fire, so investors need to be careful when looking for an entry point. Domino’s Pizza Inc. (NYSE: DPZ) is the number one pizza delivery company in the world, with roughly 13,000 stores in 50 states and more than 70 countries. The company’s system is more than 97% franchised, and 59% of the stores are located internationally.
Domino’s has benefited from a steadily growing online/digital ordering mix that currently represents over 50% of domestic orders and has a long runway for growth. Since 2008, more than 80% of the menu offerings are new or significantly revised.
Top Wall Street analysts have cited sustainable drivers that include the company’s strong, consistent price-value relationship; improving franchise unit economics, due, in part, to the proven strategy of “fortressing” markets; and growing scale and digital sophistication.
Investors receive a dividend of 0.87%. The company is expected to raise the dividend to $1.13 per share from $0.94. BofA Securities has a Buy rating on the popular pizza giant, as well as a Wall Street high $642 price objective. The consensus target is $521.82, and Domino’s Pizza stock was trading at $424.05 a share.
General Dynamics
Like other major defense contractors, this submarine and tank builder looks poised to deliver solid numbers and guidance the rest of this year and perhaps beyond. General Dynamics Corp. (NYSE: GD) is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.
Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker eight-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.
General Dynamics stock investors receive a 2.09% dividend. The expected dividend hike is to $1.26 a share from $1.19. UBS has a Buy rating and a $245 price target. The consensus target is $240.87. Shares traded at $231.70 Monday morning.
Qualcomm
This stock has been trading sideways since November and could be poised to break out when things settle down some. Qualcomm Inc. (NASDAQ: QCOM) engages in the development and commercialization of foundational technologies for the wireless industry worldwide.
The Qualcomm CDMA Technologies segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, application processing, multimedia and global positioning system products.
The Qualcomm Technology Licensing segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA, LTE and OFDMA-based 5G standards and their derivatives.
The Qualcomm Strategic Initiatives segment invests in early-stage companies in various industries (including 5G, artificial intelligence, automotive, consumer, enterprise, cloud and Internet of Things) and investment for supporting the design and introduction of new products and services for voice and data communications, new industries and applications. It also provides development and other services and related products to U.S. government agencies and their contractors.
Investors receive a 1.59% dividend. The dividend is expected to rise by three cents per share to $0.71. Baird has an Overweight rating on the Qualcomm stock and recently lifted the $200 price target to $250. The consensus target is $219.63. The stock traded at $170.50 on Monday morning.
Ross Stores
This discount retailer continues to be a favorite with cost-conscious consumers. Ross Stores Inc. (NASDAQ: ROST) operates off-price retail apparel and home fashion stores that primarily offer apparel, accessories, footwear and home fashions. About 75% to 80% of the company’s customers are women shopping for themselves or family members.
The company’s Ross Dress for Less stores sell its products at department and specialty stores primarily to middle-income households. Its dd’s Discounts stores sell its products at department and discount stores regular prices to customers from households with moderate income. As of February 10, 2022, it operated approximately 1,900 off-price apparel and home fashion stores in 40 states, the District of Columbia and Guam.
Shareholders now receive a 1.23% dividend. The $0.285 per share dividend is expected to increase to $0.30. The $128 Deutsche Bank price target accompanies a Buy rating. The consensus target for Ross Stores stock is $128.64, and shares were changing hands at $90.75 apiece.
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