3 Stocks That Could Raise Dividends In July
There’s been a lot of talk lately about the specter of inflation. In fact, I’ve weighed in on the topic a couple of times myself.
Most of us know about the destructive power even moderate inflation can have over time. But where it gets difficult is determining how exactly to combat against inflation…
But readers of my my High-Yield Investing premium service know the answer… One of the best defenses against inflation is a rising dividend. Don’t get me wrong, high yields are good. But it’s hard to beat the feeling of getting a pay raise from an increasing dividend.
[Read more: The Best Way To Beat Inflation? More Income…]
This one of the reasons why, I make a point to screen for stocks that are likely put more cash in your pocket in the form of dividend increases. 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. 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.
This month, I have three stocks I’d like to highlight. If you’re looking for a potential addition to your income portfolio, I can’t think of a better place to start. Here’s what I’ve found this month…
3 Upcoming Dividend Hikes
1. Stanley Black & Decker (NYSE: SWK) – We’ve talked a few times in recent months about the soaring price of lumber. A sustained uptick in housing starts deserves some of the credit (or the blame). But demand has also been driven by millions of homeowners deciding now is a good time for backyard decks, fence repairs, and other do-it-yourself projects.
Of course, that has also jump-started sales of hammers, tape measures, and saws. With its namesake brands, along with other popular lines such as Craftsman (bought from Sears), SWK is making the most of it.
The company can trace its lineage back to the Civil War when it peddled wrought-iron bolts and hinges. Today, it has grown to become the world’s No. 1 supplier of tools and storage products. Through various retail channels, it sells 50 tools per second in sixty countries worldwide.
Citing positive trends that have been “accelerated” and “amplified” by the pandemic, the company just posted record first-quarter results and sharply raised its 2021 outlook. Management is looking to bank earnings of up to $11.00 per share, a healthy increase of more than 20%. That may prove to be a lowball estimate, as the company is prepping for a second-half that “could be much stronger than our current guidance.”
Yet, even without industry tailwinds, this well-run business has always managed to reward stockholders. In fact, it has increased dividend payments for 53 consecutive years and plans to continue returning approximately half of its excess capital through dividends and buybacks.
I think that streak will be extended in July, with the quarterly distribution rising to perhaps $0.72 or $0.73 per share.
2. Kroger (NYSE: KR) – Technically, it’s possible to walk into Kroger looking for just milk and bread and leave without a full cart overflowing with groceries. Although, I’ve personally never done it.
Even on a slow day, the company caters to 10 million hungry shoppers. And all those transactions totaled $132 billion in sales last year. If you want to know how 2021 and beyond is shaping up, just know that Kroger is beefing up its workforce and hiring 10,000 new workers across its retail, e-commerce, and logistics operations.
While margins can be lean in this competitive business, Kroger is a model of efficiency and maintains strong returns on capital, shaving $1+ billion in costs for three straight years. Operating profits are expected to climb in the mid-teens this year, and dividends could follow suit.
With an investment-grade balance sheet, Kroger has been consistently raising distributions at an impressive double-digit pace ever since 2006. Last year’s hike was the 14th in a row, lifting payments by 13% to $0.18 per share.
I think we’ll see another sizeable increase within the next few weeks.
3. Camping World Holdings (NYSE: CWH) – Camping World is the nation’s premier vendor of travel trailers and other recreational vehicles, which are sold through 175 dealerships nationwide.
Even before the pandemic, consumers were already showing a fervent desire to get away from the crowds and into the great outdoors. But Covid has pulled that demand forward.
About this time last year, company execs on a conference call revealed that showroom traffic was the busiest in company history. Many of those customers were repeat buyers. But the falling number of RV trade-ins was a bullish sign indicating that new, first-time customers were entering the market.
Camping World went on to post over $5 billion in sales for the year and boost cash flows by 240%. That surge in business isn’t slacking off. In fact, the top-line ballooned by over half a billion dollars last quarter, and management just raised its full-year cash flow outlook from $665 million to $790 million – a meaningful upward revision of nearly $100 million.
And this shareholder-friendly outfit isn’t shy about sharing the wealth with investors. Regular quarterly dividends have stepped up from $0.08 to $0.09 to $0.10 per share over the past couple of years. But those payouts have been supplemented by a special dividend that has been rising even faster and now stands at $0.15 per share.
That’s a total distribution of $0.25 per share, or $1.00 annually – for an above-average yield of 2.6%.
In most cases, special dividends are one-off events that probably won’t be repeated. But Camping World treats them as “recurring” in nature as has been dishing them out on a predictable quarterly basis since 2017.
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 higher 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.