Retired income investors usually invest for high yield as they need the income payout today. For others, they will look to the future for a much larger dividend as it continues to grow. This determination should include the dividend growth rate and the ability of the company to grow cash flow into the future. In addition, stocks with a bullish outlook (based on equity summary score) will also produce a capital gain to increase future returns. Here are the stocks below the radar to add to your watch list for fast dividend growers with a bullish outlook.
Accenture plc (ACN) operates as a management consulting, technology services, and outsourcing company. ACN is trading at $58.43 with a 2.31% dividend yield. ACN dividends are paid on a semi-annual basis. The dividend growth rate is high with a 5-year average of 30%. Projected forward, this is a dividend of $5.00 or an 8.5% yield on cost. The shares are up 9.8% year to date 2012. This is a slightly cautious tone from management.
ACN is projected to have revenue growth of 8.5% in FY 12 (Aug), although the components of revenue growth may shift a bit from prior expectations, as clients are becoming more interested in projects with near-term cost benefits. We look for operating margins to expand modestly this fiscal year, as SG&A costs are whittled lower.
ACN Dividend Statistics
- Annualized Dividend $1.35
- Annualized Dividend Yield 2.31%
- Payout Ratio (TTM) 30.49%
- Dividend Growth 1 Year 63.64%
- Dividend Growth 5 Year Avg 30.99%
Harris Corporation (HRS) operates as a communications and information technology company that serves government and commercial markets worldwide. It operates in three segments: RF Communications, Integrated Network Solutions, and Government Communications Systems. HRS is trading at $42.66 with a dividend yield of 2.62%. Based on the lower 1-year growth rate of 12%, the yield on cost will be 4.62% in 5 years. For 4th quarter, revenues were in line with forecasts, but operating expenses were higher. While tactical radio orders in the key RF segment were down, this will improve as international operations will provide a boost in 2012. HRS's 2.6% dividend yield is well supported by cash flow.
HRS Dividend Statistics
- Annualized Dividend $1.12
- Annualized Dividend Yield 2.63%
- Payout Ratio 24.42%
- Dividend Growth 1 Year 12.00%
- Dividend Growth 5 Year Avg 20.55%
Norfolk Southern Corporation (NSC) engages in the rail transportation of raw materials, intermediate products, and finished goods primarily in the United States. NSC is trading at $68.81 with a dividend yield of 2.75%. Based on the 5-year growth rate of 16.4%, the future dividend will be $4.02 with a yield on cost of 5.84% in 5 years. NSC posted the strongest revenue growth, at 17%, among rail peers in the 4th quarter.
NSC benefited from positive operating leverage, growing operating income 25%. We expect this to continue into 2012, though we think wages / benefits will be a partial cost headwind. We think NSC's corridor strategy is gaining traction, and will draw further traffic in the coming year. NSC is trading down 6% year to date so it is still in the buy range. NSC has a 12-month target price at $85.
NSC Dividend Statistics
- Annualized Dividend $1.88
- Annualized Dividend Yield 2.73%
- Payout Ratio 30.07%
- Dividend Growth 1 Year 17.50%
- Dividend Growth 5 Year Avg 16.40%
Bob Evans Farms, Inc. (BOBE) owns and operates full-service restaurants under the Bob Evans and Mimi's Cafe brand names in the United States. It also sells retail gifts, food items, and other novelties in its Bob Evans Restaurants, and seven Bob Evans Restaurants & General Stores. BOBE is trading at $38.40 with a dividend yield of 2.49%. BOBE increased its dividend by 25% in 2011. Based on the 5-year growth rate of 12%, the future dividend will be $1.76 with a yield on cost of 14.6% in 5 years.
BOBE had $0.69 Q3 EPS beating the Street's $0.60, with a slightly better-than-expected consolidated operating margin while reduced tax rate offset lighter-than-expected total revenue. Q3 same-store sales turned positive at Bob Evans to +1.6%. The Street ups $34 target to $36, but maintains market perform because sales, traffic trends still rebounding from recession.
BOBE Dividend Statistics
- Annualized Dividend $1.00
- Annualized Dividend Yield 2.60%
- Payout Ratio 38.96%
- Dividend Growth 1 Year 25.00%
- Dividend Growth 5 Year Avg 12.30%
Seagate Technology (STX) designs, manufactures, markets, and sells hard disk drives for enterprise, client compute, and client non-compute market applications worldwide. STX is trading at $26.88 with a dividend yield of 3.68%. STX had a dividend blip in 2009 but has restored and raised the dividend in the past 2 years. Based on the 5-year growth rate of 16.4%, the future dividend will be $2.70 with a yield on cost of 10.04% in 5 years.
In December, sales rose 18% to $3.2B on a 24% increase in the average selling price of hard disk drives due to the industry's supply/demand imbalance. STX signed long-term agreements with its major customers. As a result, we believe hard disk prices will be more stable, but will remain at slightly higher levels. We also project more cost synergy from the acquisition of Samsung's disk drive business.
STX Dividend Statistics
- Annualized Dividend $1.00
- Annualized Dividend Yield 3.72%
- Payout Ratio 25.12%
- Dividend Growth 1 Year 156.41%
- Dividend Growth 5 Year Avg 22.67%
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