3 Stocks That Could Double Dividend Payouts In 3 Years

Jun. 08, 2012 6:33 AM ETACN, CNI, CSX, GOLD, IAG, IBM, INFY, NSC, UNP2 Comments
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Although it may seem nearly impossible, there are still a few stocks that may have the capacity to double dividend payouts within three years. These companies have boosted their dividends at exceptional rates in the past, and, assuming that favorable market conditions persist, they will be able to continue to hike their payouts at similarly lush rates in the future.

The contenders to the title of companies capable of doubling their dividends within three years include management consulting and outsourcing firm Accenture (ACN), gold miner IAMGold (IAG), and rail transportation firm Union Pacific Corporation (UNP). Stocks of these companies have a high likelihood to outperform their peers featuring low or no dividend growth.

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Accenture is a $36.6 billion global management consulting, technology services, and outsourcing firm headquartered in Europe. The company has increased dividends by four-and-half times since 2006. On average, the company's dividend has grown by 31% a year over the past five years.

The company is cash rich, as it boasts some $3.6 billion or almost $5 a share in free cash flow. Although the company's outlook has clouded somewhat because of a brewing recession in Europe, the company has the capacity to withstand any transitory weakness. Analysts forecast that the company will grow its EPS by 10% a year for the next five years.

With abundant free cash flow, the company is currently paying a dividend yield of 2.4% on a low payout of 36% of trailing-twelve-month earnings and an even lower 27% of free cash flow. Assuming that the company continues to boost its dividend at an average rate close to 31% in the future, it can double the payout ratio within three years.

For the reference, Accenture's peers McKinsey & Co., The Boston Consulting Group, and Deloitte, are privately held. Competitors International

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DividendInvestr is a start-up finance website focusing on dividend stocks, fund holdings, and investing gurus. The site is edited by Serkan Unal who has been in financial markets for more than 10 years. Serkan has a finance degree in finance with a strong quantitative background.

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