As many of you know, I make it a regular habit to pinpoint three or four stocks that are primed for a dividend hike in the coming month.
Why do I point this out? Well, I have profiled 16 candidates so far this year. And as expected, nearly all of them have lifted their distributions.
Most have delivered sizeable gains as well. Genuine Parts (NYSE: GPC) (profiled here) is up 18.3% for the year; Air Products & Chemicals (NYSE: APD) has rallied 21.9%; and Best Buy (NYSE: BBY) (profiled here) has surged an impressive 39.3%.
Let's keep that streak going.
Here are three more dividend payers to watch in the coming weeks...
1. American Water Works (NYSE: AWK) -- Founded more than a century ago, American Water Works is the nation's largest publicly-traded water utility. The company owns 600 treatment plants, 1,000 wells, and more than 50,000 miles of transmission pipeline. It provides clean water and wastewater removal service to 15 million customers in 46 states.
While regulated utilities aren't known for growth, AWK has closed 65 deals over the past five years, adding 100,000+ customer connections. Over the same time frame, quarterly dividends have been climbing at a brisk double-digit pace, rising to the current $0.45 per share.
The company invested $1.5 billion last year to modernize outdated infrastructure, capital expenditures it will be allowed to recoup with a fair return. Earnings are forecast to increase by 8% to 10% this year, likely fueling another distribution hike within the next few weeks. I'm expecting a bump to near $0.50 per share.
2. Invesco (NYSE: IVZ) -- Invesco is a money management shop with $950 Billion in assets under management (AUM). Like most traditional mutual fund managers, it has suffered client outflows as investors gravitate toward low-cost index funds and ETFs. The organization bled $49 billion in net assets in 2018.
But 2019 is looking brighter. Clients are pouring cash into Invesco's suite of passive ETFs, which, coupled with market appreciation, have helped AUM rebound sharply. More important, Invesco will soon be absorbing Oppenheimer funds (best known for its emerging-markets expertise), which has over $250 billion in AUM.
The pending merger will drive AUM well north of $1 trillion, making Invesco the nation's sixth-largest money manager. This is an industry where size and scale matter. By spreading fixed costs over a much larger asset base, profit margins will improve. While debt levels might keep any increase in check, we could see another bump in the dividend next month.
3. Bank OZK (NYSE: OZK) -- Formerly known as Bank of the Ozarks, this small regional lender is a hidden gem. For those who aren't geography buffs, the Ozark mountains straddle the border between Arkansas and Missouri. I attended college in this part of the country and am personally familiar with this well-run financial institution.
Headquartered in Little Rock, the company has 250 branches and offices throughout Arkansas, Florida, Georgia, Texas and several other states. The bank has attracted $18 billion in low-cost deposits, which support a loan book of $17 billion. Rather than rattle off a bunch of statistics, let me just say that OZK has been named the #1 bank in the United States for its asset size for the past eight years running.
The bank has posted 40 consecutive years of positive net income -- zero annual losses in its history. And it has generated record net interest income in 17 of the past 19 quarters. With strong credit quality and one of the industry's leanest expense structures, it can afford to pay generous dividends.
OZK has increased distributions for 35 straight quarters, and with a conservative payout ratio of 25%, I expect that trend to continue.
Action To Take
I would consider OZK a strong candidate for our High-Yield Investing premium portfolio if its yield touches 4%. My subscribers and I will keep a close watch on this stock -- as well as the other two I've mentioned today.
In the meantime, feel free to research these names further on your own. While none of these stocks qualifies as a "buy" strictly because of the likelihood of a dividend hike, the mere fact that these are candidates for a dividend increase means that there are good things happening with the company that make them worth further consideration for your portfolio.