2 Stocks That Could Raise Dividends In October
It’s one of my favorite times of the year. Summer is over, the kids are back in school, and we enter the best time of year for sports fans. The pennant race in baseball heats up, college football stadiums fill up with fans on Saturdays, and pro football kicks off throughout the week.
But as investors, we also know that the fall is also one of the best times for dividend hikes. That makes it the perfect time to take a look for stocks that could hike their dividends soon.
As Chief Strategist of High-Yield Investing, searching for stocks that are set to put more cash in your pocket is part of my job. Each month, 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. 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.
This month, I have two stocks I’d like to highlight. So if you’re looking for a potential addition to your income portfolio, consider looking at these names further…
2 Upcoming Dividend Hikes
1. Starbucks (NYSE: SBUX) – You gotta love the fall. The air is suddenly crisp, and the leaves begin to turn. The World Series gets underway. And cash generators like Starbucks reward their faithful shareholders with dividend hikes.
The ubiquitous coffee chain raised its distributions from $0.25 to $0.30 per share in November 2017 and then to $0.36 in November 2018. The 2019 hike lifted the payout to $0.41 per share, followed by a step up to $0.45 in 2020. The most recent boost last November took the payout up to $0.49.
So what can we expect in 2022 and beyond?
Well, after a sleepy stock performance this year, the latest long-range financial forecast provided a wake-up jolt. Annual revenue growth through fiscal 2025 has been revised upward from single-digit (9%) to double-digit (11%) territory. And thanks to margin expansion, earnings are expected to march even faster, increasing 15% to 20% per year.
That growth will be fueled by aggressive international expansion, particularly in China, where annual sales could top $1 billion within the next few years. While much of the U.S. is saturated, penetration into untapped markets overseas could help the global store count surpass 45,000 locations by 2025, up from around 34,000 today.
Between now and then, Starbucks intends to return $20 billion to stockholders via dividends and buybacks. I think it will get the ball rolling later this month with another dividend raise, perhaps to around $0.53 per share.
2. Visa (NYSE: V) – Most dividend investors take a quick glance at Visa’s sub-1% yield and walk right on by. That’s a mistake – and not just because the stock has delivered market-crushing returns year after year.
Visa’s payout may seem stingy on the surface, but only in relation to its swiftly rising share price. Dividends have doubled over the past five years, rising from $0.195 to $0.375 per share. That’s a compounded annual growth rate of 14%. But the stock has been rising at almost the same pace, keeping the yield pinned down.
Not a bad problem to have.
Visa’s dominant card processing network forms a near-impenetrable economic moat that can handle 65,000 transactions per second. The company expedites retail purchases in nearly 200 countries across the globe, facilitating $10+ trillion in payment volume last year. And it has a long growth runway ahead as the world shifts toward contactless electronic transactions.
The company processed 49.3 billion transactions last quarter, cementing its role at “the center of money movement” while driving earnings up more than 30% from a year ago.
Visa has faithfully raised dividends for 14 straight years. And with a conservative payout ratio of around 20%, there is ample room to extend that streak. Before the pandemic, dividends were systematically raised by about 18% to 20% annually. A similar growth trajectory would drive annual payouts past $2.50 per share over the next three years.
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…
You’ll learn about 12 ultra-generous dividend payers that put more money in your pocket. And the best part? They pay dividends monthly. Go here to learn more now.