3 Stocks That Could Hike Dividends In January

Christmas just came early. That’s because it’s time for my monthly check-in on companies that are likely to announce a dividend hike in the coming month.

If you’re new to this, here’s how it works… In each issue of my premium newsletter, High-Yield Investing, I scan the market for noteworthy special dividend hikes on the horizon, as well as for potential dividend hikes over the next four to six weeks. I give special attention to outsized double-digit increases and reliable dividend-payers that have been steadily growing payouts for a decade or more.

I flag these stocks first for my premium readers. Then, I share them with the public. It’s that simple.

If you’re looking for potential portfolio additions to research further, I can’t think of a better place to start. So without further delay, here’s what I’ve found this month…

1. Coca Cola (NYSE: KO) – Coca-Cola doesn’t really need an introduction, other than a reminder that this global beverage giant is far more than just its namesake soda. Yes, the Coke brand is one of the world’s most valuable, worth an estimated $59 billion. But it’s just one of twenty thoroughbred brands in the stable that each rake in over a billion in annual sales, along with Dasani water, Powerade sports drinks, Gold Peak sweet tea, and Simply Orange fruit juice.

These widely distributed products reach 200 countries around the globe. While some consumers are watching their intake of soft drinks, Coca-Cola is picking up steam in sugar-free, sparkling waters, and other faster-growing categories.

The company expects to push its Smartwater brand to 90,000 retail outlets in India alone by the end of the year. In the meantime, free cash flow has leaped 40%+ year-to-date to reach $6.6 billion. And since the company usually distributes about 75% of its free cash flow, get ready for higher dividends.

This Dividend Aristocrat has already hiked payments for 57 straight years. I expect to see that streak extended within the next two months. A similar increase to the last one would lift the quarterly payout to $0.41 per share.

2. Genuine Parts Company (NYSE: GPC) – This auto parts supplier (owner of the NAPA brand) has a history of raising distributions in the first quarter, having done so in each of the past six years. The latest was a 6% increase that lifted the annual dividend to $3.05 per share.

GPC has the dominant No. 1 position in the fragmented $200 billion auto parts and service market. Sales topped the $5 billion mark for the first time last quarter, rising by 6%.

But that’s nothing new. Genuine Parts has increased annual revenue 86 times in its 91-year history while delivering record earnings 8 of the past 10 years.

With thousands of parts superstores and service centers across North America and Europe, the company is in prime position to benefit from the trend of people driving their cars and trucks longer (vehicles over six years require 50% more maintenance spending annually than newer ones).

I expect to see another dividend hike approved next month, lifting annual payments to the $3.25-per-share level.

3. Medical Properties Trust (NYSE: MPW) – As the name implies, MPW owns a collection of 350 healthcare facilities across the United States and Europe. The portfolio consists of mostly acute care and rehabilitation hospitals. But it acts strictly as a landlord, leaving the day-to-day operations to experienced tenants. (For what it’s worth, I wrote about one of MPW’s biggest catalysts — the ageing of America — in this piece, calling it “the biggest trend in the market.”)

MPW has been in acquisition mode lately, investing $3.7 billion in medical properties this year (expanding its portfolio by 40%). Those facilities are 100% leased and will generate an attractive return of about 8%. Management expects the newly acquired properties to deepen funds from operation (FFO), which already rose 15% last quarter to a record $147 million ($0.33 per share).

Steady rental income supports a generous quarterly distribution of $0.26 per share, which puts the yield at 4.8%. Dividends have increased by a penny in each of the past five years. Most of those hikes have occurred in February.

MPW is the nation’s second-largest non-government owner of hospitals and is actively pursuing additional sale-leaseback transactions (whereby the company purchases real estate and then immediately rents it back to the former owner).

As it stands, management is forecasting FFO to run at an annualized pace of $1.57 per share. That’s enough to cover 150% of the current dividend. I don’t see demand for hospital beds declining anytime soon. I consider MPW a potential portfolio candidate and plan to take a deeper look at the company in the coming weeks.

Action To Take

Remember, just because these stocks are likely to increase dividends doesn’t necessarily make them “buys.” We won’t be adding them to the High-Yield Investing portfolio right away without doing our own due diligence first, and neither should you. That said, we’ll be watching these names closely.

In the meantime, if want to know about my absolute favorite high-yield picks, then I invite you to check out my latest report right here.