3 Income Growth Companies With A History Of Increasing Yields

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Includes: DE, HD, V
by: Jeff Williams

In looking for companies with strong growth potential and a history of paying a dividend, Deere and Company (NYSE:DE), Visa (NYSE:V) and Home Depot (NYSE:HD) are all very interesting stocks that meet this criteria. All three of these companies are well positioned to capitalize on growth in their particular sectors, while maintaining a respectable payout ratio.

Deere and Company (DE)

John Deere is an agricultural equipment company that is uniquely positioned to capitalize on growth. John Deere is capitalizing on the need for a more efficient use of land, by providing its customers with new high margin and more efficient machinery. While still focusing on growth, John Deere has been able to pay its shareholders a healthy dividend.

"For nearly 175 years, John Deere has capitalized on opportunities. We see opportunities coming again. Global macro-trends -- population and income growth in developing nations -- will drive increased demand for agricultural output and infrastructure investment. Technology advances and continued agricultural mechanization will open and expand markets.

"John Deere is uniquely positioned to capitalize on these economic tailwinds. And, just as important, we're in a position to make a difference in the world by supporting a higher quality of life."(Deere and Company Website)

Looking back from the year 2001, John Deere has had a steady history of dividend increases which includes a 2 for 1 stock split in 2007.

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The current dividend payment as of January 3rd, 2012 for John Deere is $.41 USD per common share. In 2012, John Deere is expected to have an estimated EPS of $7.84. Estimating Deere's sales at $39.19 billion, a profit margin of 8.4% and a projected profit of $3.17 billion, Deere will have an estimated EPS of $7.84. With an expected dividend payout of $1.64 and an EPS of $7.84, John Deere will have a payout ratio of 20.9%.

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With a payout ratio of 20.9%, Deere and Company should be able to maintain its dividend, while continuing to grow in the agricultural sector. The Current Yield for Deere and Company is $2.2741

For more information on John Deere please read my article: John Deere Internal And External Factors Driving Performance.

Visa (V)

"Visa is a global payments technology company that enables consumers, businesses, financial institutions and governments to use digital currency instead of cash and checks." (Visa Corporate website)

Visa is uniquely situated as people, businesses and governments are less focused on physical currency and more focused on digital methods of payment. While focusing on the expanding use of digital currency, Visa has been able to pay its shareholders a modest but growing dividend since its IPO in 2008.

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The current dividend payment for Visa as of February 1st, 2012 is $.22 USD per common share (class A and C shares). In 2012, Visa is expected to have an estimated EPS of $5.20. Estimating Visa's sales at $10.26 billion, a profit margin of 40.4% and a projected profit of $4.15 billion, Visa will have an estimated EPS of $5.20. With an expected dividend payout of $.88 and an EPS of $5.20, Visa will have a payout ratio of 16.9%.

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With a payout ratio of 16.9%, Visa should be able to maintain its dividend, while focusing on growth in digital currency. The current yield for Visa is $0.727213

For more information on Visa please read my article: Increasing Revenues Drive Revenues in 2012.

Home Depot Inc. (HD)

"Founded in 1978, The Home Depot, Inc. is the world's largest home improvement specialty retailer with fiscal 2011 retail sales of $70.4 billion and earnings of $3.9 billion. The Home Depot has more than 2,200 retail stores in the United States (including Puerto Rico and the U.S. Virgin Islands and the territory of Guam), Canada, Mexico and China." (Company website)

Home Depot is well positioned to achieve growth in North America as people are slowly beginning to spend money on their homes. Also, Home Depot is expanding into China where the company will capitalize on the emerging middle class market.

Looking back from the year 2001, Home Depot has had a steady history of dividend increases. Even during the financial crisis of 2008 into 2009, Home Depot was able to maintain its dividend.

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The current dividend payment for Home Depot as of February 1st, 2012 is $.29 USD per common share. Heading into fiscal year 2013, Home Depot is expected to have an estimated EPS of $2.54. Estimating Home Depot's sales at $73.92 billion, a profit margin of 5.01% and a projected profit of $3.70 billion, Home Depot will have an estimated EPS of $2.54. With an expected dividend payout of $1.16 and an EPS of $2.54, Home Depot will have a payout ratio of 45.6%.

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Even with a Payout ratio being quite high in comparison to Visa and Deere and Company, MSN money is reporting the future EPS for Home Depot in fiscal year 01/14 at $3.25. With a modest increase in the dividend over the next year and a substantial gain in earnings, Home Depot should be able to bring the payout ratio down, to its more historical levels.

The current yield for Home Depot is $2.2542

For more information on Home Depot please read my article: Home Depot: Customer Service Initiatives Increase Revenue

Deere and Company , Visa and Home Depot are all very interesting stocks that have growth potential while paying a dividend. All three of these companies are well positioned to capitalize in growth in their particular sectors, while maintaining a respectable payout ratio.

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