High Dividend Stocks That Can Afford To Double Dividend Payments

|
 |  Includes: BLK, COP, DOW, INTC, IP, K, NOC, RTN, SRE, WMB
by: Insider Monkey

When a company that pays dividends starts to find that it has a lot of leftover earnings, it may opt to increase its dividend or offer a one-time special dividend to its shareholders. The situation is not unusual in companies that have a very low payout ratio, meaning that it pays out a smaller amount of its net earnings as dividends. The dividends in these companies are also more sustainable.

Using the stock screener at Finviz, we developed a list of high dividend stocks that could afford to double dividend payments. Each company on this list pays at least 3% in annual dividends and has less than a 40% payout ratio.

International Paper Co. (NYSE:IP) is a paper and paper products company with a $13.10B market cap. It pays a dividend of 3.50% and has a payout ratio of 27.17%. IP’s EPS is expected to grow by 5.50% per annum over the next five years. It is currently trading at $30.08 a share. David Tepper’s Appaloosa Management had $77.12 million in IP at the end of the third quarter. Ron Gutfleish’s Elm Ridge Capital, Jim Simons’ Renaissance Technologies and D.E. Shaw’ D E Shaw are also fans of the company.

Sempra Energy (NYSE:SRE) is a gas utilities company with a $13.15B market cap. It has a dividend yield of 3.50% and a payout ratio of 32.71%. SREs EPS is expected to grow by 7.00% per annum over the next five years. It is currently trading at $55.29 a share. Phill Gross and Robert Atchinson’s Adage Capital Management increased its position in SRE by +43% in the third quarter, leaving it with a position in the company worth over $47.86 million at the end of September. Clint Carlson’s Carlson Capital and John A. Levin’s Levin Capital Strategies also like SRE.

Northrop Grumman Corporation (NYSE:NOC) is a major diversified aerospace defense company with a $15.33B market cap. It has a dividend yield of 3.41% and a payout ratio of 30.93%. NOC’s EPS is expected to grow by 7.94% per annum over the next five years. It is currently trading at $58.60 a share. Jean-Marie Eveillard’s First Eagle Investment Management had $249.07 million invested in NOC at the end of September after increasing its holding in the company by +49% in the third quarter. Cliff Asness’ AQR Capital Management and David Dreman’s Dreman Value Management are also fans of the company.

Williams Companies, Inc. (NYSE:WMB) is an oil and gas pipelines company with a $15.81B market cap. It has a dividend yield of 3.73% and a payout ratio of 37.77%. WMB’s EPS is expected to grow by 19.50% per annum over the next five years. It is currently trading at $26.94 a share. James Crichton and Adam Weiss’ Scout Capital Management had $355.07 million invested in WMB at the end of September after upping its stake in the company by +145% during the third quarter. Jeffrey Tannenbaum’s Fir Tree also likes WMB. The fund had $317.42 million invested in the company at the end of the third quarter.

Raytheon Co. (NYSE:RTN) is a major diversified aerospace defense company with a $16.80B market cap. It has a dividend yield of 3.54% and a payout ratio of 33.30%. RTN’s EPS is expected to grow by 8.43% per annum over the next five years. It is currently trading at $48.62 a share. Phill Gross and Robert Atchinson’s Adage Capital Management had $266.09 million in RTN after upping its holding in the company by +11% in the third quarter. RTN is also a top pick for Alexander Roepers’ Atlantic Investment Management and Ron Gutfleish’s Elm Ridge Capital.

Kellogg Company (NYSE:K) is a processed foods and packaged goods company with a $18.12B market cap. It has a dividend yield of 3.41% and a payout ratio of 37.47%. K’s EPS is expected to grow by 7.94% per annum over the next five years. It is currently trading at $50.40 a share. Phill Gross and Robert Atchinson’s Adage Capital Management had a position in K worth $140.69 million at the end of the third quarter. Israel Englander’s Millennium Management and Cliff Asness’ AQR Capital Management also like the company.

BlackRock, Inc. (NYSE:BLK) is an asset management company with a 32.43B market cap. It has a dividend yield of 3.03% and has a payout ratio of 28.64%. BLK’s EPS is expected to grow by 16.96% per annum over the next five years. It is currently trading at $180.01 a share. Bill Miller’s Legg Mason Capital Management had over $160.25 million invested in BLK at the end of September after increasing its position in the company by +5% during the third quarter. John Paulson’s Paulson & Co is also a fan of BLK.

The Dow Chemical Company (NYSE:DOW) is a major diversified chemicals company with a $35.21B market cap. It has a dividend yield of 3.36% and a payout ratio of 32.23%. DOW’s EPS is expected to grow by 9.00% per annum over the next five years. It is currently trading at $29.92 a share. Phill Gross and Robert Atchinson’s Adage Capital Management, Ray Dalio’s Bridgewater Associates and D. E. Shaw’s D E Shaw each had significant positions in DOW at the end of the third quarter.

ConocoPhillips (NYSE:COP) is a major integrated oil and gas company with a $98.48B market cap. It has a dividend yield of 3.56% and a payout ratio of 32.21%. COP’s EPS is expected to grow by 5.92% per annum over the next five years. It is currently trading at $73.85 a share. Warren Buffett’s Berkshire Hathaway had more than 3% of its portfolio invested in COP at the end of the third quarter, in a position valued at $1.84 billion at the end of September. Jean-Marie Eveillard’s First Eagle Investment Management and Bill Miller’s Legg Mason Capital Management are also fans of the company.

Intel Corporation (NASDAQ:INTC) is a diversified electronics company with a $124.96B market cap. It has a dividend yield of 3.42% and a payout ratio of 30.30%. INTC’s EPS is expected to grow by 10.65% per annum over the next five years. It is currently trading at $25.09 a share. Paul Ruddock and Steve Heinz’s Lansdowne Partners had $491.52 million in INTC at the end of the third quarter. Ken Fisher’s Fisher Asset Management and Jean-Marie Eveillard’s First Eagle Investment Management are also fans of the company.

Disclosure: I am long COP.