Stimulus checks are nice.
But steadily growing dividend checks are even better.
Businesses that hike their dividend payout on a consistent basis have the ability to:
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Protect investors from the ravages of inflation.
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Provide an ever-increasing stream of income.
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Outperform the stock market over the long term.
Let’s take a quick look at three stocks that significantly upped their dividend payout in recent weeks.
One of them could be the next perpetually growing income machine in your portfolio.
1. Deere
Leading off our list is agricultural equipment giant Deere, which pumped its quarterly dividend 17% last week to $1.05 per share.
It’s the company’s second dividend increase this year, and given the strong tailwinds working in Deere’s favor, investors shouldn’t expect that trend to slow anytime soon.
Deere’s leadership position in the industry will serve it well as inflationary pressures, uncertainty surrounding the climate, and increased infrastructure spending fuel long-term demand for agriculture and construction products.
In the most recent quarter, earnings per share spiked 107% on revenue growth of 29%.
“The latest increase in our quarterly dividend is a reflection of Deere’s recent strong performance and the success of our new strategy and operating model,” said Chairman and CEO John May.
Deere shares currently sport a dividend yield of 1.1%, while its main U.S. rival Agco offers a yield of 0.6%.
2. Altria
With a quarterly dividend hike of nearly 5% late last week, tobacco giant and dividend king Altria is next on our list.
It will now pay shareholders a quarterly dividend of $0.90 per share versus the previous rate of $0.86 per share, marking the 52nd consecutive year the company has raised its payout.
“Today’s dividend increase reflects Altria’s intention to return a large amount of cash to shareholders in the form of dividends,” the company wrote, “and is consistent with Altria’s long-term objective of a dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share.”
While the shares have performed sluggishly in recent months, Altria’s capital-light business model continues to generate boatloads of cash. And with management’s recent acquisitions in the vaping and marijuana space, the company’s long-term trajectory is no longer solely dependent on the U.S. cigarette industry.
Altria shares currently offer a particularly attractive dividend yield of 7.2%, higher than that of other major tobacco stocks including Philip Morris International (4.7%) and Universal (6.2%).
3. Wyndham Hotels & Resorts
Rounding out our list is hotel operator Wyndham Hotels & Resorts, which hiked its quarterly dividend from 16 cents per share to 24 cents per share earlier this summer, a whopping increase of 50%.
It’s no surprise that Wyndham shares were bruised badly amid the height of the pandemic, but the company seems to be rolling now that restrictions are easing. Wyndham’s relatively low operating costs allow its U.S. hotels to break even at 30% occupancy levels, making it an attractive risk/reward play on a full return to normal.
In the second quarter, Wyndham generated $104 million in free cash flow while revenue per available room — a key stat in the hotel industry — spiked 110% year-over-year.
“With continued increasing demand from our leisure and everyday business travelers, our select-service franchise business model generated another strong quarter of adjusted EBITDA and cash flow, allowing us to increase our dividend by 50%,” said President and CEO Geoffrey Ballotti.
Wyndham currently offers a dividend yield of 1.3%, while main hotel rivals Hyatt and Marriott International currently don’t offer a dividend.
Sidestep the stock market?
There you have it: three attractive dividend growth to consider for the long haul.
While skyrocketing meme stocks are making all the news today, creating a steadily growing income stream should be job one for conservative investors.
Of course, you don’t have to limit yourself to the stock market to do that.
For instance, this investing service makes it possible to lock in a steady rental income stream by investing in premium real estate properties — from commercial developments in LA to residential buildings in NYC.
You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to, and you’ll receive regular payouts in the form of quarterly dividend distributions.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
