The Federal Reserve just confirmed that interest rates will continue to stay at very low levels, probably until at least 2014. While the economy had been showing some signs of life, more recent data shows that it could be stalling. The data in March was disappointing for both jobs and GDP. An economic stall is another reason why rates are not likely to rise, and that means dividend stocks could remain as one of the best places for investors to earn income. When evaluating which dividend stocks are best, it makes sense to study the history and frequency of dividend raises, because if you have two stocks that pay about the same yield today, but one has a history of raising the dividend each year, returns could be far better over time by going with the stock that offers dividend growth. With profits coming in strong for many corporations, a growing number of them are raising dividends. In fact, 2012 could be called a boom year for dividend increases. Here are a few companies that have a consistent history of regular increases, and also just recently raised dividends again:
Exxon Mobil (NYSE:XOM) just announced it would raise the dividend from 47 cents to 57 cents. This is just the latest in a long line of increases from the world's largest oil company. Exxon's quarterly dividend has almost doubled in the past few years. It was 32 cents per share in 2007, but thanks to regular increases, it is now 57 cents per share. Exxon's dividend payments have grown at an average annual rate of 5.7% over the last 29 years. The combination of Exxon's consistent history of dividend payments and raises, plus the fact that oil stocks tend to provide investors with a solid hedge against, makes it a top choice for those seeking income.
Here are some key points for XOM:
Current share price: $86.08
The 52 week range is $67.03 to $88.13
Earnings estimates for 2012: $8.42 per share
Earnings estimates for 2013: $9 per share
Annual dividend: about $1.88 per share which yields about 2.2%
Johnson & Johnson (NYSE:JNJ) just announced a 7% increase in the dividend, which will take it from $2.28 to $2.44 per share. This company is one of the few with a record of raising dividends for 49 consecutive years. In 2005, the annual dividend was $1.10 per share, but the payout has more than doubled to $2.44 annually. Johnson & Johnson has been in business since 1866, and has a wide variety of healthcare products with brands like Listerine, Motrin, Band-aid, Reach, Splenda, Tylenol, Lubriderm, Sudafed, and others. The company recently reported earnings of $3.9 billion or $1.41 per share and it offered full-year 2012 guidance of between $5.07 to $5.17 per share. With a very strong history of dividend payments and because it has a stable source of revenues from healthcare related products, this stock makes sense for almost any portfolio.
Here are some key points for JNJ:
Current share price: $64.85
The 52 week range is $59.08 to $68.05
Earnings estimates for 2012: $5.13
Earnings estimates for 2013: $5.44
Annual dividend: $2.44 per share which yields 3.7%
Chevron Corporation (NYSE:CVX) recently announced an 11.1% increase in the dividend payment. This brought the dividend from 81 cents to 90 cents per quarter, or from $3.24 to $3.60 on an annual basis. Chevron has increased its annual dividend for 25 consecutive years, and this year will mark 100 years of continuous dividend payments to shareholders. With regular increases the dividend has more than doubled since 2005, when it was just 40 cents. With strong earnings coming in, the company is likely to continue raising the dividend in the future. Chevron recently reported first quarter earnings of $6.5 billion, or $3.27 per share. Chevron shares also have appeal for value investors, since the stock trades for just about 8 times earnings.
Here are some key points for CVX:
Current share price: $106.18
The 52 week range is $86.68 to $112.28
Earnings estimates for 2012: $13.44 per share
Earnings estimates for 2013: $13.65 per share
Annual dividend: $3.24 per share which yields 3%
Abbott Laboratories (NYSE:ABT) just raised the dividend for the 40th year in a row, and it has also paid a dividend since 1924. In 2012, the quarterly dividend was raised from 48 cents to 51 cents. The annual dividend is up ten-fold from 1990, when it was just 20 cents per share. As a major pharmaceutical and medical devices company, Abbott has a stable source of revenues and it has been reporting strong financial results. It recently reported earnings of $1.03 per share, which is an increase of 13.2%. Abbott also raised full year 2012 guidance from $4.95-$5.05 per share, to $5-$5.10 per share. Furthermore, the company plans to separate into two publicly-traded companies later this year, which could unlock more shareholder value. Abbott shares have been in an uptrend so it might makes sense to wait for pullbacks.
Here are some key points for ABT:
Current share price: $61.98
The 52 week range is $46.29 to $62.57
Earnings estimates for 2012: $5.02 per share
Earnings estimates for 2013: $5.35 per share
Annual dividend: $2.04 per share which yields 3.3%
The Coca Cola Company (NYSE:KO) recently raised the dividend from 47 cents to 51 cents per quarter. Coca Cola has been raising the dividend for many years. For example, the dividend was 14 cents each quarter in 1997, and thanks to consistent increases, it has more than tripled, to 51 cents per quarter. Furthermore, the board of directors recently approved a 2 for 1 stock split, which is likely to receive shareholder approval on July 10, 2012. The company plans for growth globally, but especially in emerging markets. As emerging market consumers see disposable incomes rise, more will be buying brands such as Sprite, Vitamin Water, Minute Maid Orange Juice, Dasani, and other products made by this company. Investors have been bidding up Coca Cola shares in the past few days, probably over the stock split news. Because of that, the stock is now close to the 52-week high and overbought. It makes sense to wait for a pullback to around $72 or less.
Here are some key points for KO:
Current share price: $76.63
The 52 week range is $63.34 to $77.82
Earnings estimates for 2012: $4.10 per share
Earnings estimates for 2013: $4.49 per share
Annual dividend: $2.04 per share which yields 2.7%
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.