3 Stocks That Could Raise Dividends In March

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. It’s part of my job. 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.

For the past couple of months, we’ve focused on special dividend payers. But now that we’re past the time of year when we typically see special dividend announcements, we’re back to our regularly scheduled programming.

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. Best Buy (NYSE: BBY) – Just five years ago, Best Buy stock was languishing near $50 and the electronics retailer was viewed as a mere showroom for customers to window shop before purchasing items online. Not anymore. The company has successfully reinvented itself, as evidenced by a doubling of the stock to $100.

Concurrent with this transformation is a steady upward climb in dividends. Quarterly payouts have been rising at an impressive 14% annual clip, doubling from $0.34 to $0.70 per share. Increases have been approved in late February/early March in each of the past five years.

Could that streak be extended again next month? Most likely.

Before the pandemic struck, Best Buy posted 12 straight quarters of positive “comps”. The company was also on track to produce annual revenue of $50 billion by 2025, representing a healthy top-line expansion of nearly $10 billion. While Covid took a noticeable bite out of store traffic, business is now firmly back on track.

In fact, management is now expecting to reach that $50 billion goal in 2022, three years ahead of schedule. The company just posted record third-quarter results, driven by strong demand for big-ticket items such as phones, appliances, and home theaters. Digital sales are still running more than double pre-Covid levels, showing some staying power for this growing channel.

After temporarily hitting the pause button on share repurchases, Best Buy will invest $2.5 billion in buybacks this year. But after upping its outlook, there will be plenty left for dividends. I expect another double-digit hike in the coming weeks, an encore to last year’s hefty 27% increase.

2. 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. The 2022 federal budget has set aside $768 billion in national defense spending.

For perspective, that’s more than the GDP of Finland and Hong Kong, combined. A few billion here. A few billion there. It’s a windfall for defense contractors such as General Dynamics, which lands plum contracts for everything from Abrams tanks to advanced weapons systems to nuclear submarines.

The company’s IT division was just awarded an $829 million contract – not bad for a day’s work.

General Dynamics’ aerospace division (which includes the manufacture of Gulfstream jets) is currently enjoying a strong book-to-bill ratio of 1.7. This means for every $1.00 in products shipped out the door, it received $1.70 in new incoming orders. Orders have hit levels unseen for more than a decade, pushing the backlog to $88 billion.

How many businesses have nearly $90 billion in future revenues already inked and on the books? GD generated a record $4.3 billion in operating cash flows last year. Management put those proceeds to good use, eliminating $1.5 billion in debt, plowing $800+ million back into the business, and distributing $1.3 billion in dividends.

I think we’re looking at another dividend hike within the next few weeks. If so, it would be the 25th straight annual increase, qualifying GD for dividend aristocracy.

3. UPS (NYSE: UPS) – This one isn’t a projection, but a done deal. UPS just authorized plans to boost its quarterly dividend by almost half.

Quarterly payouts only inched up by a token penny per share last year from $1.01 to $1.02 per share. But starting next month, they will climb to $1.52 per share, an increase of nearly 50%. For the record, that’s the sharpest hike since UPS went public in 1999.

The higher payment is in keeping with a new policy to return approximately half of the company’s earnings each year.

While package delivery volumes are down fractionally, UPS has seen an 11% increase in revenues per piece, thanks in part to new shipping surcharges. That’s a big reason why the company just posted fourth-quarter earnings that easily topped Wall Street’s expectations, sparking a sharp rally in the stock.

UPS is the classic example of a wide-moat business whose profits are protected by stout competitive advantages. It would be nearly possible for a new would-be rival to replicate UPS’ vast global delivery network and bite into its market share. And its massive scale means stellar efficiency, which helps explain the superior returns on capital north of 30%. That’s a level rarely seen.

With revenues topping $100 billion per year and a higher dividend on the way, UPS would make a great core portfolio anchor for income seekers.

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.

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.