3 Stocks That Could Raise Dividends In February

As you may know, each month I make a point to screen for stocks that are likely put more cash in your pocket. As Chief Investment Strategist of High-Yield Investing, it’s part of my job.

In each issue of my premium newsletter, I scan the market for potential dividend hikes. Ideally, I’m looking for hikes that could happen over the next four to six weeks. I also highlight noteworthy special distributions on the horizon.

We don’t do this just for fun. In a perfect scenario, we find great ideas for consideration in our premium portfolio… Companies posting 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 so that they can research them and get a head start. Then, I share them with the public.

We’ve had a pretty good run of finding solid ideas from this, so it pays to follow along each month. Some of them end up paying off big time.

If you’re looking for a potential addition to your income portfolio, then 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. Amgen (Nasdaq: AMGN) – Amgen is a leading global biotech developer with special expertise in cancer research and renal failure (kidney disease) treatments. Its biggest blockbuster is the anti-inflammatory drug Enbrel, which ranks in the top-five worldwide with $5+ billion in annual revenue.

But this is no one-trick-pony. Amgen’s world-class portfolio spans nearly two dozen products, which will haul in more than $25 billion in combined sales this year. And with a highly efficient manufacturing platform, the company converts every dollar of sales into 50 cents of free cash flow — $3.2 billion last quarter alone.

That profit margin is off the charts, allowing for generous returns to stockholders. Amgen’s dividends have been climbing at a healthy double-digit pace over the past five years, marching from $1.00 to $1.60 per share. And it isn’t stopping there.

With a flurry of new product launches to help combat patent erosion and bio-generic competition, earnings are expected to top $16 per share this year, up from previous guidance. With a confident outlook and a modest payout ratio, distributions are set to rise again. Starting in March, shareholders can expect to see payments hiked by 10% to $1.76 per share, or $7.04 annually.

While the rising share price has kept a lid on the yield, that’s still good for a market-beating forward yield of nearly 3%.

2. T. Rowe Price (Nasdaq: TROW) – T. Rowe Price needs no introduction. It’s one of the world’s leading money managers, offering a broad spectrum of actively-managed mutual funds – three-fourths of which have outrun their respective benchmarks over the past decade – as well as private wealth management services.

Thanks to its low fees and superior performance, T. Rowe Price funds are well represented in most brokerage’s fund platforms and are a favorite with retail advisors. They are also ubiquitous in retirement plans. If you have a 401(K), then odds are good at least a portion of it is overseen by T. Rowe Price.

Rowe Price has a staggering $1.4 trillion in assets under management (AUM), most of which resides in top-tier funds rated as 4 or 5-star by Morningstar. But the company itself is a rather good option for investors as well…

It consistently attracts hefty inflows of new client cash (only suffering net outflows a handful of quarters over the past 20 years). Combine that with strong market appreciation, and AUM has increased by $160 billion over the past year alone. Those assets earn management fees day and night, and T. Rowe’s 40%+ operating margin is the best in the business.

That helps explain why quarterly dividends have risen every single year since the IPO 34 years ago. Hikes tend to occur in the first quarter, the most recent being a nice 18% bump in February 2020 to $0.90 per share. With the buoyant market inflating AUM and a new push into the exchange-traded fund (ETF) arena, don’t be surprised to see another upward jog in the dividend next month.

3. Air Products and Chemicals (NYSE: APD) – APD is a leading global supplier of industrial gases. The company provides oxygen, nitrogen, hydrogen, and carbon dioxide, as well as rarer gases such as neon and xenon. These products are marketed to many fields including aerospace, food/beverage, metals fabrication, and healthcare.

It’s not the most exciting business, but demand is remarkably stable – as witnessed by 38 consecutive years of dividend increases.

APD has now posted 20 straight quarters of positive earnings growth. Over those five years, the company has expanded its profit margins by a robust 1,500 basis points and delivered steady 13% annual earnings growth. As a result, shareholders have seen dividends rise from $0.80 to $1.34 per share, an increase of nearly 70%.

The 15% hike last year was the largest in company history.

So what’s in store for 2021? Well, APD has shaken off the impact of Covid and won several large-scale project awards that could move the cash flow needle.

Among other highlights, the company has been chosen to supply equipment to massive liquefied natural gas (LNG) plants in Qatar and Mozambique and was awarded big supply contracts at electronics manufacturing facilities in Malaysia and China. It also secured a $7 billion transportation project to supply hydrogen to run fleets of trucks and buses.

I like that most of APD’s business runs through on-site pipelines that feed customers under long 15-20 year contracts. Those agreements help minimize day-to-day volatility. All told, the company serves 170,000 customers across 30 industries operating in 50 countries worldwide.

With a healthy balance sheet and continued margin expansion, I fully expect this Dividend Aristocrat to lift distributions next month for the 39th straight year.

Action To Take

Remember, just because I highlight stocks that are likely to increase dividends doesn’t necessarily make them “buys.” These are merely ideas to get you started in the hunt for high yields.

With that said, all of these stocks are worthy candidates for more research as a potential addition your portfolio. But if you want to know about my absolute favorite high-yield picks, then you’ll need to be a member of High-Yield Investing.

To learn more, check out my latest report right here.