After years of a low interest rate environment, which now is trending higher, many investors have turned to equities, not only for the growth potential but also for the 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. While interest rates are rising, these companies still make sense for investors looking for solid growth and income potential.
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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%. That is, 10% for the increase in stock price and 3% for the dividends paid.
Five large-cap companies that are Wall Street favorites are expected to raise their dividends this week. 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 five do raise their dividends, top analysts expect them to, generally 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.
Chubb
This is a solid bet for worried investors now, and it posted solid first-quarter earnings. Chubb Ltd. (NYSE: CB) provides insurance and reinsurance products worldwide. The company operates through the following segments.
Its North America Commercial P&C Insurance segment offers commercial property, casualty, workers’ compensation, package policies, risk management, financial lines, marine, construction, environmental, medical, cyber risk, surety and excess casualty, as well as group accident and health insurance to large, middle market and small commercial businesses.
The North America Personal P&C Insurance segment provides affluent and high net worth individuals and families with homeowners, automobile and collector cars, valuable articles, personal and excess liability, travel insurance and recreational marine insurance and services.
The North America Agricultural Insurance segment offers multiple peril crop and crop-hail insurance, as well as coverage for farm and ranch property and commercial agriculture products.
The Overseas General Insurance segment provides coverage for traditional commercial property and casualty; specialty categories, such as financial lines, marine, energy, aviation, political risk and construction risk; and group accident and health and traditional and specialty personal lines for corporations, middle markets and small customers through retail brokers, agents and other channels.
The Global Reinsurance segment offers traditional and specialty reinsurance under the Chubb Tempest Re brand to property and casualty companies.
Its Life Insurance segment provides protection and savings products comprising whole life, endowment plans, individual term life, group term life, medical and health, personal accident, credit life, universal life and unit linked contracts.
The company markets its products primarily through insurance and reinsurance brokers.
Investors currently receive a dividend of 1.55%. The company is expected to raise the dividend to $0.82 per share from $0.80. Barclays has a $250 price target on Chubb stock. The consensus target is near $234, and the shares traded at $208.00 early Monday.
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Leggett & Platt
While somewhat off the radar, this stock has almost been cut in half over the past year and offers massive upside potential. Leggett & Platt Inc. (NYSE: LEG) designs, manufactures and markets engineered components and products worldwide.
The company offers steel rods, drawn wires, foam chemicals and additives, innersprings, specialty foams, private label finished mattresses, mattress foundations, wire forms for mattress foundations, adjustable beds, industrial sewing and quilting machines, and mattress packaging and glue drying equipment, as well as machines to produce innersprings for industrial users of steel rods and wires, manufacturers of finished bedding, big box and e-commerce retailers, bedding brands and mattress retailers, department stores and home improvement centers.
Leggett & Platt also provides mechanical and pneumatic lumbar support and massage systems for automotive seating; seat suspension systems, motors and actuators and cables; titanium, nickel and stainless-steel tubing, formed tubes, tube assemblies and flexible joint components for fluid conveyance systems; and engineered hydraulic cylinders to automobile original equipment manufacturers (OEMs) and Tier 1 suppliers, aerospace OEMs and suppliers, and mobile equipment OEMs.
Leggett & Platt stock investors receive a 4.48% dividend. The dividend is expected to double to $0.44 a share from $0.22. The Goldman Sachs target price of $52 is higher than the $46.50 consensus target. The shares traded at $37.10 Monday morning.
24/7 Wall St.Lennox International
The industrial machinery and HVAC heavyweight is a solid idea for worried investors now. Lennox International Inc. (NYSE: LII) designs, manufactures and markets a range of products for the heating, ventilation, air conditioning and refrigeration markets in the United States, Canada and internationally.
The Residential Heating & Cooling segment provides furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment and accessories, comfort control products and replacement parts and supplies for residential replacement and new construction markets.
The Commercial Heating & Cooling segment offers unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment and variable refrigerant flow commercial products for light commercial markets.
The Refrigeration segment offers condensing units, unit coolers, fluid coolers, air-cooled condensers, air handlers and refrigeration rack systems for preserving food and other perishables in supermarkets, convenience stores, restaurants, warehouses and distribution centers, as well as for data centers, machine tooling and other cooling applications, and compressor racks and industrial process chillers.
The company sells its products and services through direct sales, distributors, and company-owned parts and supplies stores.
Shareholders receive a 1.66% yield. The company is expected to boost the $0.92 per share dividend to $1.03. The $334 Deutsche Bank target price compares with a $264.07 consensus target on the shares and a recent share price of $219.30.
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Northrop Grumman
This was ranked as one of the top five defense contractors by sales last year, and it is on the BofA Securities US 1 list of top stock picks. Northrop Grumman Corp. (NYSE: NOC) provides innovative systems, products and solutions in unmanned systems, cyber, C4ISR and logistics and modernization to government and commercial customers worldwide.
The Aerospace Systems segment designs, develops, integrates and produces manned aircraft, unmanned systems, spacecraft, high-energy laser systems, microelectronics and other systems and subsystems.
The Information Systems segment offers advanced solutions for the Department of Defense, national intelligence and federal civilian, state, international and commercial customers. It provides products and services primarily in the fields of command and control, communications, cyber, air and missile defense, intelligence processing, civil security, health information technology, and government support systems.
The Technical Services segment provides logistics, modernization and sustainment services, as well as other advanced technology and engineering services, including space, missile defense, nuclear security, training and simulation services.
Northrop Grumman currently comes with a 1.39% dividend. The $1.57 per share dividend is expected to increase to $1.70. BofA Securities has set its price objective at $550. The consensus price target is much lower at $477.27. The shares traded at $458.60 early Monday.
Packaging Corp. of America
This company should continue to do well, especially if the economy does not totally bog down. Packaging Corporation of America (NYSE: PKG) manufactures and sells containerboard and corrugated packaging products in the United States.
The Packaging segment offers various containerboard and corrugated packaging products, such as conventional shipping containers used to protect and transport manufactured goods, multicolor boxes and displays that help to merchandise the packaged product in retail locations and honeycomb protective packaging products, as well as packaging for meat, fresh fruit and vegetables, processed food, beverages and other industrial and consumer products. This segment sells its corrugated products through a direct sales and marketing organization, independent brokers and distribution partners.
The Paper segment manufactures and sells commodity and specialty papers, as well as communication papers, including cut-size office papers and printing and converting papers. This segment sells white papers through its sales and marketing organization.
The dividend yield currently is 2.57%. The company is expected to lift that in a big way, to $1.20 from $1.00. The Truist Financial target price is $182. The consensus target is $168.50. Shares were trading at $154.75.
These five top blue chip 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 shows that the company is doing well and has the earnings and cash flow strength to increase the payouts.
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Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
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