5 Stocks Ready For A Big Dividend Boost

Includes: AA, CHK, HBAN, MS, TXN
by: Ry Frank

Investing in stocks always entails a high level of planning and assessment because of the manifold risks involved. Even the best stocks do not always prove lucrative investments as there is a range of factors that invariably affect performance. Given the recent trends of volatility and skepticism prevalent in the stock market, many investors have found themselves in a quandary as to which stock would award them higher returns on investment. To make their task simple, this objective study highlights five stocks that, in our view, will boost dividends in the year 2012:

Chesapeake Energy Corp. (CHK)

Chesapeake Energy Corporation is one of America's largest oil and gas producers with investments in a little less than 46,000 projects. Financial reports for the latest full fiscal year proved that Chesapeake had enjoyed a good run among unfavorable and volatile market conditions. It closed the year with a net income of $1.77 billion and total revenue of nearly $9.3 billion. Continuing its good run, the year 2011 was as favorable for Chesapeake with an increase of almost 56% and 11% in oil and gas production. It declared earnings of about $0.09 per share in the last quarter of 2011. Compared with Chesapeake's third-quarter revenue of up to $2.58 billion for 2010, $3.97 billion worth of revenue was recorded in the corresponding period for 2011. Currently, Chesapeake has a total market capitalization of nearly $13.6 billion and its share price has fluctuated around $22. It has managed well in maintaining its payout ratio at around 17% and its price-to-earnings ratio is currently around -26.17%. In the last quarter of 2011, Chesapeake registered yield of nearly 8.6% and dividend yield of 1.5%. These are seen as promising signs that show future growth in the first quarter of 2012 with the company already showing clear signs it redirected and converged its focus on liquids. All these statistics suggest that Chesapeake will most likely boost dividends in the year 2012 to assert its financial well being to investors.

Texas Instruments Incorporated (TXN)

Texas Instruments is involved in the designing and manufacturing of analog and digital Integrated Circuits and semiconductors. Texas Instruments has exceeded forecasted earnings for the fourth quarter of 2011. Evidently, inventory correction measures that the company had resolved to undergo last summer have now been completed. Texas Instruments saw higher-than-expected revenue in quarter four of 2011 with the acquisition of National Semiconductor at a cost of nearly $6.5 billion. Sales of market leading analog chip accounted for an increase in earnings of 7%, with sales at $6.4 billion. This year, many financial analysts and stock think tanks project modest growth in sales with total sales expected to reach $13.9 billion. I agree with their assessment. Projections for consensus earnings are currently $1.89, an upward movement that is likely to pick up momentum until 2013. Texas Instruments' projected annual growth of 8% by 2013, will increase its worth by about $15 billion. The company has a total market capitalization of nearly $37 billion. Currently, it has a price per share of around $32.7 with earnings per share ratio of nearly $2.48. Texas Instruments is counted among high-yield dividend stocks maintaining an impressive yield of around 1.9%. Also, Texas Instruments' newly formed alliance with Amazon (NASDAQ:AMZN) on the Kindle Fire tablet has opened new avenues of growth. This step is seen as a promising venture that is sure to bear good fruits. Therefore, in my personal opinion, Texas Instruments will boost dividends in 2012 as a show of its financial stability.

Huntington Bancshares Incorporated (HBAN)

Huntington Bancshares is a diversified regional bank with significant penetration in major cities in Ohio. Huntington Bancshares has shown promising signs of growth in the follow up to the official end of recession in 2009, especially in the Midwest states. All through the third quarter of 2011, Huntington Bancshares saw slow and steady growth among volatile market trends. Its current market capitalization stands at approximately $4.93 billion dollars with an average daily trading volume of $14.28 million. Huntington Bancshares has healthy earnings per share of about $0.59 at a share price of around $5.66. It has a decent price-to-earnings ratio of about 9.6, which it has been able to maintain. Huntington Bancshares has enjoyed a good dividend history thus far, with a dividend rate of approximately $0.04 and a dividend yield of nearly 2.83%. All these favorable triggers have helped Huntington Bancshares widen its competitive moat allowing it to invest in new business ventures such as using an iPad as a marketing platform. With these financial readings, and amidst favorable conditions allowing for better investment opportunities, we believe that Huntington Bancshares has the capacity to boost its dividends in the year 2012.

Alcoa Inc. (AA)

Alcoa is ranked the top producer of reinforced aluminum in the U.S. It has booming operations in more than 30 countries around the world. Alcoa was observed to be on a downward spiral late last year after maintaining a favorable streak for nine quarters. The fourth quarter of 2011 saw Alcoa report losses worth approximately $193 million as a consequence of continued global operations. However, it would be unfair to conclude that Alcoa has had an entirely unfavorable run in 2011 simply because of its performance in the last quarter. In the major part of 2011, Alcoa registered steady growth with revenue from global operations exceeding $614 million. Compared with the previous year's numbers, Alcoa effectively doubled its revenue. Moreover, most analysts believe that AA)" rel="nofollow">increasing global oil prices led to higher transportation costs resulting in lower returns on investments. The result was a disappointing end to what was a good financial year for the company. Nevertheless, the fact that Alcoa has inarguably performed exceptionally well in the last nine out of 10 quarters should not be overlooked. Amidst increasing demand for aluminum, Alcoa is forecasted to recover quickly from its latest financial shortcomings. With a market capitalization of approximately $10.5 billion and estimated annual revenue exceeding $24.6 billion, Alcoa is counted among the big players. It has earnings per share of $0.95 at a share price of around $9.8. Alcoa has a decent payout ratio of about 22% with a five-year dividend yield floating around 2.20% and a dividend rate nearing $0.03. Amidst sharp rise of 12% in demand of aluminum in the global markets, the global giant is all set on a track to recovery. Therefore, we believe that Alcoa has the capacity to boost its dividends in the year 2012.

Morgan Stanley (MS)

Morgan Stanley is a financial services company that provides specialized products and services to its clientele through its subsidiaries and affiliates. Leading stock analysts have recently upgraded ratings of Morgan Stanley from 'Underperform' to 'Neutral' as a result of the company's exceptional performance in the closing quarter of 2011. The financial standing of Morgan Stanley has seen much stability amidst a volatile market and changing trends. A recent initiative of Morgan Stanley to restructure and re-strategize organic and inorganic growth are also seen as welcoming signs that are expected to help the company boost its prospects of growth. Fourth-quarter earnings of Morgan Stanley easily exceeded forecasts of financial think tanks. Recently, Morgan Stanley has resolved to streamline its operations by focusing more on the core businesses that have traditionally promised higher profitability. Amidst a somewhat sluggish economic environment, Morgan Stanley has cleverly grown through acquisitions. Furthermore, the company's decision to finally resolve a 2-year-old legal war with MBIA means that it would be able to comply with newly introduced regulatory requirements. All these positive triggers are expected to increase the competitive moat of Morgan Stanley over the year. On the stock market, Morgan Stanley has a total market capitalization of nearly $35.7 billion with a daily trading volume of approximately $31.96 million. At a share price of around $18.28, it has earnings per share of approximately $1.11 with a price-to-earnings ratio close to 16.4. Morgan Stanley has a dividend of $0.05 and a yield of 1.1%. In my opinion, the year 2012 will certainly see Morgan Stanley boost dividends amidst a thriving business and better prospects of growth.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: This is the independent stock analysis of a trader. I think that the aformentioned stocks are likely to boost dividend payouts in the current year amidst higher prospects of growth. However, market speculation is subject to risks and the stocks can be seen following a radically different course with the advent of contrary market conditions and economic scenarios for the businesses.