Digging for dividends? Image: Caterpillar.
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Dividend investors know that the only thing better than reliable quarterly income is a consistent track record of payout growth over time. Many companies have recently jumped on the dividend bandwagon, while others have paid out money to shareholders for decades. Yet one thing you can generally count on is that most dividend-paying companies that can afford to raise their quarterly payouts do so on an annual basis -- and they tend to make those increases at the same time of year. With that in mind, let's look at which companies are most likely to reward shareholders with higher payouts over the next month or so.
Lowe's amazing streak of annual dividend boosts goes back more than half a century. The home-improvement retailer's most recent raise, made last year on May 30, represented its 52nd straight annual increase, and it was a whopper: the $0.23 per share quarterly payout was up 28% from the previous level.
With the expansion in profits stemming from the recovering housing industry, Lowe's only pays out about a third of its earnings in the form of dividends. The Dividend Aristocrat has built up a strong reputation based largely on its payout history, and keeping its streak intact will almost certainly be a high priority in the coming weeks. Moreover, with a yield of just 1.3%, Lowe's has some catching up to do to hold pace with many of its dividend-paying peers.
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Last year on June 11, Caterpillar announced that it would boost its dividend by a whopping 17%, paying out $0.70 per share quarterly. Yet that generous payout, which now equates to a 3.2% yield, hasn't prevented the heavy-equipment manufacturer's stock from falling over the past year, as poor economic conditions throughout many areas of the world have reined in the ability of Caterpillar's customers to spend money on capital equipment.
In particular, recent weakness in the energy industry has only exacerbated problems that Caterpillar had already felt in the mining and construction sectors. Even with its woes, though, Caterpillar pays out less than half its earnings in the form of dividends, and that should give the company the latitude to make further increases, extending its string of consecutive annual raises to 22 years.
Shipping magnate FedEx last raised its dividend on June 9, 2014, a 33% jump that sent the company's quarterly payout up to $0.20 per share. As impressive as that might sound, though, it represents a yield of just 0.5% and comprises only a tenth of FedEx's bottom-line results.
FedEx recently made a huge strategic move, agreeing to buy Netherlands-based TNT Express to boost its exposure to Europe. As e-commerce builds on the continent, FedEx could duplicate its U.S. growth as a result of greater online purchase activity. Lower fuel costs could also help the stock independent of any dividend move.
Dividend stocks can be lucrative for investors through both rising payouts and long-term appreciation. Companies like these three offer dividend investors the best of all possible worlds, with strong track records that suggest further growth well into the future.
The article These 3 Stocks Should Raise Their Dividend Soon originally appeared on Fool.com.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends FedEx. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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