2 Stocks That Could Raise Dividends In March
As longtime readers know, I make a regular habit of looking for dividend hikes.
After all, 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. 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 each year to equip our fighting forces. The 2023 federal budget has set aside $773 billion in national defense spending.
For perspective, that’s more than Finland’s and Hong Kong’s GDP 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 just won a $152 million cybersecurity and software development contract. Not bad for a day’s work.
General Dynamics’ aerospace division (which includes manufacturing Gulfstream jets) is currently enjoying a strong book-to-bill ratio of 1.2. This means for every $1.00 in products shipped out the door, GD received $1.20 in new incoming orders. That influx of orders has propelled backlog to a record high $91.1 billion.
How many businesses have $90+ billion in future revenues already inked and on the books? GD generated a record $4.6 billion in operating cash flows last year. Management put those proceeds to good use, eliminating $1 billion in debt, plowing $1.1 billion back into the business, and distributing $1.4 billion in dividends.
General Dynamics typically makes annual dividend hikes with the April payment. The quarterly distribution rose from $1.19 to $1.26 per share last spring, the 25th straight yearly increase. That qualifies GD as a Dividend Aristocrat.
I believe that streak will be extended to 26 within the next few weeks.
2. UPS (NYSE: UPS)
This one isn’t a projection but a done deal.
Last February, UPS boosted its dividend by nearly half, from $1.02 to $1.52 per share, the sharpest hike since the package delivery company went public in 1999. And starting this week, distributions are climbing again. This time to $1.62, or $6.48 annually.
If that wasn’t enough, the board also authorized a hefty $5 billion share repurchase program. Both are 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 a healthy 9% uptick in revenues per piece. That’s a big reason why the company posted fourth-quarter earnings that again topped Wall Street’s expectations.
UPS is the classic example of a wide-moat business with profits protected by stout competitive advantages. It would be nearly impossible 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…
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.