5 stocks with recent dividend increases | Dividends
Many income investors like to hunt high yielding stocks.
However, it’s important to remember that dividend-paying stocks are only really worth your attention if they continue to pay off for you over the long term.
After all, what’s the point of buying a mediocre stock with a big yield today just to see its stocks collapse and the dividends ultimately cut or eliminated? Sometimes it makes sense to go after companies that regularly pay larger and larger dividends rather than a company that simply has the highest return.
The following top five titles are all notable for the scale of their recent increases, long-term distribution history – or both:
- Apple (ticker: AAPL)
- Chubb Limited (CB)
- Clorox Co. (CLX)
- Lowe’s Cos (LOW)
- Union Pacific Corp. (UNP)
Let’s start with the megastock Apple, which declared a quarterly dividend of 22 cents in May – a 7% increase from its previous level of 20.5 cents per share per quarter. The stock’s current yield remains below 1%, but if you look at the dividend history of other Big Tech companies, it’s still interesting that Apple is continually betting on its payouts.
And let’s face it, with AAPL stock rising nearly 450% over the past five years, roughly four times the S&P 500’s gains, many investors aren’t even interested in the earning potential here. Note that distributions have jumped about 10% per year over the past five years – and have risen more than 130% from 2012, when the tech giant reinstated its dividend.
This trend shows that CEO Tim Cook and the company are committed to creating long-term shareholder value, not just quick wins for day traders.
The $ 75 billion insurance giant Chubb just approved a rather modest increase in payments of about 3% in May, from 78 cents quarterly to 80 cents.
However, as longtime investors know, Chubb isn’t necessarily remarkable because of the size of its dividend, but because of its reliability. CB stock has increased its distributions once a year for 28 consecutive years – placing it on the S&P 500’s list of “dividend aristocrats”, companies that have increased their dividends for at least 25 constituent years – and l he well-managed financial equity has an enviable cash position and a strong balance sheet thanks to regular client bonuses.
This makes it very appealing to long-term investors, and the rise in dividends in May is further proof that patience can pay off with this stock.
In early June, cleaning giant Clorox announced a 5% increase in its quarterly dividend from $ 1.11 to $ 1.16 per share. Larger distributions will become payable to shareholders on August 13.
While not a gigantic increase, Clorox has a long history of delivering shareholder value through approximately 20 consecutive years of dividend increases and some form of dividend paid for over 50 consecutive years. .
Granted, CLX’s stock has fallen behind lately as it has retreated from its pandemic-level highs driven by huge demand for bleach and other sanitizers. That said, the dividend yield is still pretty good for this staple consumer stock and the track record of continuous increases is noteworthy.
In late May, home improvement giant Lowe’s announced that its dividend would rise to 80 cents per share, payable August 4. That’s a huge 33% increase from its previous payment of 60 cents, and more than double the 35 cents per share. it paid off five years ago.
And longer term, it’s worth noting that Lowe’s has paid a cash dividend quarterly since its IPO in 1961, also ranking among the dividend aristocrats on Wall Street.
Management said the recent huge increase was based on “the company’s continued business momentum, growth trajectory and strong cash flow generation.” Perhaps understandably, stocks have outperformed the broad market well in 2021 with cumulative returns of almost 20% versus around 14% for the broad S&P 500 over the same time frame.
Union Pacific Corp. (UNP)
Iconic rail operator Union Pacific announced in mid-May that it was increasing the quarterly dividend on its common shares by 10%, to $ 1.07 per share from 97 cents previously.
Moreover, even with this increase, UNP still pays less than 50% of the profits for a very comfortable and sustainable distribution schedule – and one that is ripe for a future increase.
Founded in the 1860s and currently operating over 32,000 miles of track and 8,300 locomotives in its fleet, it’s hard to imagine competition coming soon for this industrial pillar. And given its strong financial position and the recent increase in dividends, it might be worth considering UNP for your own long-term investment for income.