4 Bullish Stocks Set To Raise Dividends
Karen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Investors may be receiving early holiday gifts from companies preparing to hike their dividend payments. When measured against the anemic 1% to 2% yield found in treasuries and some low-yield dividend stocks, this additional cash payout becomes all the more valuable.
Each of the companies analyzed below shares corresponding traits: they all have divided yields over 4%, are major players in their sector, and have high debt as compared to their cash. For these reasons, potential shareholders may want to make their investment decision well before the scheduled earnings date to avoid chasing after a profit that’s already been figured into the stock price.
Altria Group’s (NYSE: MO) 4.70% dividend yield is about to get even sweeter. The companies’ bull run started in summer 2010, and lifted the stock price from $24.36 on August 10, 2010, to a high of $36.16 this past July. The current quarterly dividend stands at $0.41 and could possibly increase to $0.44 or $0.45.
The companies’ ROE is 98.75%, but investors need to keep in mind that Altria Group has high debt-to-capital, with cash reported at $1.53 billion against $13.69 billion in debt. The company recently initialed a cash tender offer of $2 billion to help reduce their debt that’s scheduled to mature.
Altria Group manufactures and sells cigarette, smokeless products and wine worldwide, and includes such well-known brands as Marlboro, Skoal and Copenhagen. The companies’ next earnings date is scheduled for October 24, 2012.
Lockheed Martin (NYSE: LMT) currently pays a $4.00 dividend for a 4.40% yield. The stock has been on a solid uptrend since August 2011 and recently hit a new high of $93.91. The quarterly dividend of $1.00 is expected to rise to $1.10 or possibly $1.15.
The company has an impressive ROE of 102.40% and equally impressive debt-to-capital figures, reporting cash of $3.80 billion to debt of $6.49 billion. Government contracts are Lockheed Martin’s primary source of revenue, but the announcement of future defense spending cuts hasn’t caused any slowdown of the stock’s upward momentum yet. Earnings are scheduled for release on October 22, 2012.
AT&T (NYSE: T) has a 4.70% yield and pays a $1.76 dividend. The stock’s been in bull mode since November 2011, and is trying to break through the current $38.28 high. Analysts are looking for AT&T to raise their dividend from $0.43 to $0.45 or $0.46.
Investors will like the fact that AT&T has consecutively raised its dividend payment for the past 28 years. But the company has cash of $2.18 billion compared to $64.53 billion in debt, and the ROE stands at 4.30%. Earnings are scheduled to be released on October 15, 2012.
American Electric Power Company (NYSE: AEP) has paid a quarterly cash dividend since 1910 and is on track to raise their dividend this quarter. The utility pays a $1.88 dividend and has a 4.30% dividend yield. The stock has been trending up since April this year and is trading near the 52-week high of $43.96. The Street is looking for a dividend increase to $0.50.
The utility is switching from fossil fuels to more environmental-friendly sources and will be taking ex-cap costs soon. American Electric Power reports cash of $377 million against debt of $18.54 billion, and has a ROE of 11.15%. The earnings are scheduled for release on October 22, 2012.
Dividend increases are a nice way for companies to reward their stockholder’s loyalty. Investors considering stock ownership should carefully weigh all factors to be sure the resulting payout is worth the financial risk.
kprogers has no positions in the stocks mentioned above. The Motley Fool owns shares of Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
