3 Stocks That Could Hike Dividends In March
As Chief Investment Strategist of High-Yield Investing, it’s my job to find stocks that will put more cash in your pocket. And as the end of another month approaches, it’s time for my monthly check-in on companies that are likely to do just that…
If you’re new to this, here’s how it works… In each issue of my premium newsletter, I scan the market for potential dividend hikes. We’re looking for hikes likely to happen over the next four to six weeks. We also highlight noteworthy special distributions on the horizon. 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 a potential portfolio addition 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…
3 Upcoming Dividend Hikes
1. Best Buy (NYSE: BBY) – Best Buy has come a long way. I’s no longer a mere “showroom” for customers to window shop before purchasing items online. In fact, the firm’s own digital sales channel has increased revenue by 15% over the past three quarters.
The electronics giant will likely book more than $43 billion in sales this year. That’s thanks to strong sales in categories such as headphones, tablets, and household appliances. Management just bumped fiscal 2020 earnings guidance to a mid-range of $5.86 per share. That’s up from a previous forecast of $5.67.
Looking ahead, the company has just outlined a series of growth initiatives. Dubbed the “New Blue Strategy”, they are expected to drive revenue to the $50 billion mark over the next five years. If that objective is reached, then the swiftly rising dividends we’ve seen will continue.
Distributions have climbed from $0.28 to $0.34 to $0.45 to $0.50 over the past three years. The step-ups usually come in the March quarter, so we could see another hike to the $0.55 per share range in the coming weeks.
2. Colgate-Palmolive (NYSE: CL) – I’m a Crest toothpaste guy myself. But Colgate has millions of loyal customers and controls more than 40% of the global market.
Aside from toothpaste, the company has built a growing portfolio of household products such as soap, shampoo, deodorant, and laundry detergent. They all get prominent placement on store aisles in 200 countries worldwide. Some of its more popular brands include Ajax, Irish Spring, and Speed Stick.
Regardless of the economy, people will always bathe, brush their teeth, and wash their clothes. These consumer staples give CL one of the most dependable dividend track records around. The company hasn’t missed an annual dividend payment since Grover Cleveland was President in 1895. It’s raised the payout for 57 years in a row – twice as long as some of the newer Aristocrats.
While growth is limited in this mature industry, CL has been rewarding stockholders with modest hikes each March. It’s likely to do so again this year.
3. General Dynamics (NYSE: GD) – There are good customers, there are great customers, and then there’s the Pentagon. The U.S. Military spends colossal sums of money each year to equip our fighting forces. In his newly-released 2021 budget, President Trump set aside $740 billion in national defense spending.
That’s a windfall for defense contractors such as General Dynamics, which manufactures everything from combat vehicles to advanced weapons systems to nuclear submarines.
General Dynamics enters 2020 with a book-to-bill ratio of 1.5. This means for every $1.00 in products shipped out the door, it received $1.50 in new orders. Huge contract awards (particularly in the aerospace and marine divisions) have driven the firm’s backlog up by 28% over the past year to $87 billion – a new record high.
With geopolitical tensions in Iran and elsewhere showing no signs of easing, the company is reporting healthy growth across all five operating divisions. Earnings are on track to rise 5% this year to $12.60 per share, which could support another hefty double-digit dividend increase next month. If so, it would be the 23rd straight annual increase, putting GD just two more hikes away from dividend nobility.
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.