4 Companies Just Boosted Their Dividends. Not All the Raises Are Equally Safe

A dividend raise says more than a yield does, because a board only lifts its payout when it trusts next year’s cash flow. American Electric Power (NASDAQ:AEP | AEP Price Prediction) set the tone this week by raising its quarterly dividend to 97 cents a share. Three more U.S.-listed companies have put the same kind of signal in writing over the past several weeks, and each one passes our minimum yield bar. Two are regulated utilities, and two are restaurant giants. Each raise depends on a different engine: data center power demand, Sun Belt customer growth, a coffee turnaround and a franchise royalty machine. Here is how safe each payout looks.

American Electric Power: Data Center Demand Funds a Bigger Check

AEP’s new 97-cent quarterly rate replaces the $0.95 it paid over the previous four quarters. The 2.1% increase lifts the annualized payout to $3.88 a share. Based on trailing payments, the stock yields 3.03% at a recent $127.17.

Dividend safety: Coverage is comfortable for a utility. Trailing dividends of $3.78 equal 65.5% of trailing EPS of $5.77. The new run rate works out to about 62% of the low end of management’s raised 2026 operating EPS guidance of $6.25 to $6.55. AEP funds its $78 billion five-year capital plan partly with outside capital, including a recently completed $2.6 billion equity offering and roughly $5 billion in DOE loans. That means regulated earnings cover the dividend. The record has been steady, with the quarterly rate rising from $0.50 in 2014 to $0.95 before this latest step.

Bull case: AEP has 69 GW of signed new load through 2030 from hyperscalers, data centers and industrial customers. It also reaffirmed 7% to 9% annual operating earnings growth through 2030. In the past two weeks, it announced a 702MW fuel cell energy solution for a major tech customer and an advanced nuclear partnership in Indiana. Alongside second-quarter results, Chief Executive Bill Fehrman said he is “highly confident in our robust business performance.” Utilities like AEP are only one piece of the AI expansion, and we rounded up seven more suppliers (power, cooling, networking) in a free report on the picks-and-shovels side of AI.

Risk: Regulators are the swing factor. AEP has disclosed a partial disallowance of its Unified Tracker Mechanism at AEP Texas and a Pirkey Plant disallowance. Both are reminders that capital spending only earns a return when commissions allow recovery.

Duke Energy: The Highest Yield in the Group Just Got Bigger

Duke Energy (NYSE:DUK) raised its quarterly dividend to $1.085 from $1.065, a 1.9% increase first paid on September 16. Its October 1 dividend announcement kept the higher rate in place for the December 16 payment. The forward annual payout is $4.34, and at $120.03 the stock yields 3.57%, the highest of the four.

Dividend safety: Trailing dividends of $4.26 equal about 63% of trailing EPS of $6.75. The forward payout comes to roughly 66% of the low end of reaffirmed 2026 adjusted EPS guidance of $6.55 to $6.80. Operating cash flow reached $12.33 billion in 2025, and Duke closed $5.3 billion in strategic transactions to shore up its balance sheet. The increases have been consistent, climbing from $0.945 before the 2020 raise to $1.085 today, with a step up every year; quarterly payments in the record go back to 1999.

The bull thesis: Second-quarter adjusted EPS of $1.43 beat the $1.31 consensus, Duke’s fifth straight beat, and the company has secured 7.6 GW of economic development projects. Retail customers grew 1.4% to about 8.73 million. Management expects to land in the top half of its 5% to 7% long-term growth range starting in 2028. Shares are down 3.19% over the past year and trade at a forward P/E of 16, which keeps the entry yield high.

Risk: Financing costs eat into growth. In the second quarter, higher depreciation cut $0.09 per share and higher interest expense cut $0.04 per share, and both costs grow as the asset base expands.

Starbucks: A Fresh Raise Riding a Real Turnaround

Starbucks (NASDAQ:SBUX) declared a $0.63 quarterly dividend on October 7, up from $0.62. That 1.6% raise is payable November 27. At $98.75, the stock yields 2.45%.

Dividend safety: The track record is the best point: 65 consecutive quarters of payouts with a 17% compound annual growth rate, according to the company. Coverage is the lowest in this group, though. The $2.52 forward annual payout represents about 99% of the low end of raised fiscal 2026 non-GAAP EPS guidance of $2.55 to $2.65. Against a free cash flow yield of 2.16%, the dividend takes roughly 113% of trailing free cash flow. Buybacks have driven shareholders’ equity to-$7.67 billion. Interest coverage of 6.60 times and net debt at 4.37 times EBITDA keep debt service manageable.

The bull thesis: the turnaround now shows up in the numbers. Fiscal third-quarter global comparable sales rose 7.9%, North America comps climbed 8.1%, and non-GAAP operating margin expanded 430 basis points to 14.4%. Non-GAAP EPS of $0.85 beat the $0.65 consensus by 30.79%. Moving China to a licensed joint venture model has already lifted International operating margin by 550 basis points. As earnings grow into the payout, coverage improves on its own.

Risk: Execution. Shares trade at 61 times trailing earnings, and third-quarter restructuring and impairment charges of $302.6 million show the rebuild still costs money.

McDonald’s: The Biggest Raise of the Bunch From a Royalty Machine

McDonald’s (NYSE:MCD) raised its quarterly dividend to $1.93 from $1.86 when it declared its December payment on September 17. The 3.8% increase is the largest percentage raise in this group. At $246.19, the stock yields 2.93%.

Dividend safety: McDonald’s has raised its quarterly dividend every year since 2008, when it paid $0.375 per quarter. Trailing dividends of $7.35 equal about 60% of trailing EPS of $12.31. With a 4.12% free cash flow yield, the dividend uses roughly 71% of free cash flow. Years of buybacks have left book equity negative, but interest coverage of 7.83 times and net debt at 3.70 times EBITDA show a business built to carry that leverage.

Bull case: About 95% of its restaurants are franchised, so most of its revenue comes as rent and royalties. The system has grown to 46,028 restaurants, the loyalty program has nearly 220 million 90-day active users, and the company is targeting 50,000 units by 2028. Shares are down 17.87% year to date and trade at a forward P/E of 17, which lifts the yield at the current price.

Risk: Traffic. Global comparable sales grew just 1.3% in the second quarter, down from 3.8% a year earlier, and U.S. guest counts were negative.

Four Raises, Four Engines Behind the Income

AEP and Duke Energy are turning grid demand into regulated earnings growth, and they offer the highest yields here. McDonald’s posted the largest dividend increase, backed by royalty cash flow. Starbucks has the most turnaround upside but the lowest buffer. Lincoln Electric (NASDAQ:LECO) also raised its quarterly dividend 10.1% to $0.87, but its 1.2% yield falls short of the 2% minimum every stock in this list had to pass.

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