2 Stocks That Could Raise Dividends In May
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. Medtronic (NYSE: MDT) — Based in Dublin, this medical device maker sells a wide range of medical tools and surgical instruments to healthcare facilities in 150 countries. Its products have touched 76 million patients around the world.
Medtronic spends freely on research and development (R&D) to maintain its edge, investing $2.7 billion over the past year alone. But with ample free cash flow, it could distribute even more ($3.4 billion) to shareholders. This model of consistency has raised dividends for 45 straight years and counting.
Will we get another? The odds are good, especially given the firm’s prodigious cash generation and ambitious new product launch schedule. Medtronic took in $7.7 billion in revenue last quarter, with particular strength in its cardiovascular and neuroscience segments. More importantly, the company just lifted earnings guidance.
Management is now anticipating full-year profits of $5.28 to $5.30 per share (that tight range suggests a high degree of confidence). That’s enough to cover the current dividend nearly two times over.
While ventilator sales have slacked off a bit from the Covid peaks, the return to normalcy has also ended the widespread deferral of elective surgical procedures. Medtronic’s sales often exhibit a high correlation to surgery volumes.
The board typically sets dividend policy in May (the end of the fiscal year). Quarterly payouts have stepped up from $0.58 to $0.63 to $0.68 per share over the past three years. A similar hike would put future dividends near $0.73 per share – lifting the payout to double the market average.
2. Southern Company (NYSE: SO) – Southern is one of the nation’s largest power generators, with a portfolio of wind, solar, hydro, nuclear, and natural gas power plants and 43,000 megawatts of capacity. The company also provides electricity and gas utility services to 9 million residential and business customers.
If that weren’t enough, it even owns substantial midstream pipeline assets.
Southern has a pattern of hiking distributions each May, typically in two-cent increments. Since 2018, dividends have stepped up from $0.60 to $0.62 to $0.64 to $0.66 to $0.68 per share. Continuing this pattern would put future payouts at $0.70 per share.
With a distribution footprint that stretches from Alabama to Virginia, Southern collects millions of steady utility bill payments each month. And that regulated income stream fuels one of the steadiest dividends you’ll find. This is one of the few companies that has either maintained or increased distributions every year dating back to 1948.
That’s a remarkable streak of 75 years. Southern enjoys lower fuel costs and solid customer growth. Municipal regulators have also approved rate hikes for many of the firm’s utility customers. Earnings climbed another 8% last year to reach $3.9 billion, or $3.60 per share.
That pace won’t make you rich overnight. Still, there’s something to be said for seven straight decades without a single dividend cut.
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.
And 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.