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.
Applied Materials
This is one of the premier semiconductor capital equipment stocks. Applied Materials Inc. (NASDAQ: AMAT) provides manufacturing equipment, services and software to the semiconductor, display and related industries. It operates through three segments.
The Semiconductor Systems segment develops, manufactures and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching and selective deposition and removal, as well as metrology and inspection tools.
The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment and factory automation software for semiconductor, display and other products.
The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays, organic light-emitting diodes and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smartphones and other consumer-oriented devices, as well as equipment for processing flexible substrates.
Shareholders currently receive a 0.76% dividend. The company is expected to lift the dividend from $0.24 per share to $0.26. Citigroup recently lifted its $178 target price on Applied Materials stock to $180. The consensus target is $172.82, and Friday’s closing trade was posted at $125.74, which was down close to 4% for the day.
Colgate-Palmolive
This top dividend payer is also a very safe play for investors. Colgate-Palmolive Co. (NYSE: CL) is a great stock to buy in consumer staples. The company continues to deliver solid execution and is one of the best-positioned in its sector, given its strong brands in attractive categories, particularly oral care.
Over half of Colgate’s total revenues (52%) are derived in faster-growth emerging economies, and the company maintains leading or near-leading market shares across Brazil, Russia, India and China. While those have slowed over the last year, a pickup in growth could be coming, especially with a weak dollar making products attractive overseas.
Colgate-Palmolive stock investors now receive a 2.33% dividend. It is expected that the dividend will rise to $0.46 per share from $0.45. Credit Suisse has a $90 price target, and the consensus target is $87.31. Shares closed on Friday at $77.36 apiece.
Dick’s Sporting Goods
This popular retailer is heading into the busiest time of the year, with spring right around the corner. Dick’s Sporting Goods Inc. (NYSE: DKS) operates as a sporting goods retailer primarily in the eastern United States. It provides hardlines, including sporting goods equipment, fitness equipment, golf equipment and hunting and fishing gear products, as well as apparel, footwear and accessories.
The company also owns and operates Golf Galaxy, Field & Stream, and other specialty concept stores; e-commerce websites; and GameChanger, a youth sports mobile app for scheduling, communications and live scorekeeping. As of May 1, 2021, it operated 730 Dick’s Sporting Goods stores.
Investors receive a 1.60% dividend. The $0.4375 per share dividend is expected to increase to $0.5125. The Truist Securities price target of $168 is well above the $145.32 consensus target for Dick’s Sporting Goods stock, as well as Friday’s closing print of $109.71.
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.
Qualcomm stock investors are now paid a 1.59% dividend. The expected dividend increase is to $0.71 per share from $0.68. Baird recently lifted the price target from $200 to $250. The consensus target is $219.63, and the stock closed at $162.26 a share on Friday.
Redwood Trust
This is a very solid play for income investors looking for a reasonably safe vehicle. Redwood Trust Inc. (NYSE: RWT) operates as a specialty finance company in the United States. The company operates through three segments.
The Residential Lending segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization or transfer to its investment portfolio. This segment also offers derivative financial instruments to manage risks associated with residential loans.
The Business Purpose Lending segment operates a platform that originates and acquires business purpose loans, such as single-family rental and bridge loans for subsequent securitization or transfer into its investment portfolio.
The Third-Party Investments segment invests in residential mortgage-backed securities issued by third parties, as well as in K-Series multifamily loan securitizations and SLST reperforming loan securitizations. This segment also offers servicer advance and other residential and multifamily credit investments.
The company qualifies as a REIT for federal income tax purposes, and it intends to distribute at least 90% of its taxable income as dividends to shareholders.
Shareholders receive a 7.59% dividend. The company is expected to lift the dividend by two cents per share to $0.25. The $16.50 Raymond James price target accompanies a Strong Buy rating. Redwood Trust stock has a $15.41 consensus target, and Friday’s closing trade was at $10.28.
These five top blue-chip companies that are rated Buy across Wall Street 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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