2 Stocks That Could Raise Dividends In December
It’s the most wonderful time of the year. While the holiday season is a special time, for investors, it also means that we might find a little “gift” in the form of a dividend hike. And if the company in question has been particularly good this year, we may even be treated to a special dividend.
As you may know, each month, over at my High-Yield Investing premium newsletter, I make a point to screen for stocks that are likely put more cash in your pocket. Ideally, we are looking for hikes that could happen over the next four to six weeks. I 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.
As usual, I give my premium readers a head start before sharing them with everybody else. And this month is particularly special, because in addition to two potential dividend raisers, I shared details on a company that routinely pays a special dividend around this time of year.
Unfortunately, I’m going to have to hold off on sharing this one with you today out of fairness to my premium readers. But stay tuned, because I may profile this one in more detail in the future.
Also, before we get started, remember that these aren’t necessarily “buys”. This is just to get you started on the path to further research before adding it to your own portfolio. With all that in mind, here’s what I’ve found this month…
2 Upcoming Dividend Hikes
1. Bristol Myers Squibb (NYSE: BMY) – With annual revenues approaching $40 billion, Bristol Myers Squibb is one of the world’s largest biopharmaceutical developers. The company concentrates its vast research and development (R&D) spending on three main therapeutic areas: oncology, immunology, and cardiovascular health.
Key products include the blockbuster blood thinner Eliquis, one of the most prescribed drugs in the world. Eliquis has increased annual sales by at least $1 billion annually since 2014 and now hauls in $9 billion worldwide. And with patent protection in place until 2026, that cash will continue to pour in over the next five years. Beyond that, the company has a deep development pipeline, with 64 promising novel therapies in the early stages of clinical trials and 22 advancing to Phase III.
Through the first three quarters, 2021 sales are running about 9% of last year’s pace, driven largely by Revlimid (a hematology treatment inherited from the acquisition of Celgene), whose revenues now eclipse Eliquis. And thanks to manufacturing efficiencies, the company pockets sky-high gross profit margins of 80%.
Management just tightened its guidance range and is now anticipating earnings of $7.40 to $7.55 this year. Less than 30% of that will be needed to meet this year’s dividends (a comfortable payout ratio). BMY likes to lift its payouts towards the end of the year.
The board approved a 10% hike in December 2019 to $0.45 per share, followed by a similar increase in December 2020 to $0.49. It’s a good bet that distributions will be rising again in a few weeks into the low $0.50s, which would mark the 14th straight annual increase.
2. ABM Industries (NYSE: ABM) – You probably haven’t heard of ABM Industries. It’s not exactly a household name. But it might be worth a few minutes to take a deeper look – considering the company has paid 221 consecutive quarterly dividends. Along the way, it has increased annual distributions for the past 53 years in a row.
As you know, 25 straight years of uninterrupted dividend hikes is the threshold to be labeled a Dividend Aristocrat. This obscure company has met that rare goal twice over, making it eligible to be crowned as a “Dividend King”. There are only 31 members of this elite group, which includes trustworthy names like Coca-Cola and Procter & Gamble.
Founded over a century ago, ABM is an industrial conglomerate that provides a wide array of building maintenance services, including custodial and janitorial work, mechanical and air conditioning repairs, electrical installations, parking management, and even landscaping. Customers include airports, hospitals, universities, sports stadiums, and other large-scale facilities.
It’s not a glamorous business, but demand from clients like American Airlines and the University of Miami is constant year after year. And acquisitions have kept the bottom line moving forward. After reporting healthy double-digit revenue growth last quarter, the company has confidently upped its earnings outlook. And considering it certainly doesn’t want to lose its hard-earned reputation as a Dividend King, it’s a safe bet we’ll see payouts move a bit higher in the coming weeks.
Action To Take
We’ve had a pretty good run of finding solid ideas from this exercise, so it pays to follow along each month. Some of them end up paying off big time. So if you’re looking for a potential addition to your income portfolio, then I can’t think of a better place to start your research…
But 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, the two candidates mentioned above each have a solid long-term track record of rewarding shareholders.
In the meantime, if you want to know about my absolute favorite high-yield picks, you need to check out my latest report…
In it, you’ll find 5 “Bulletproof Buys” that have weathered every dip and crash over the last 20 years and STILL handed out massive gains. And each one of them carry high yields, with dividends that rise each and every year. Go here to check it out now.