Five stocks that will boost their dividends in April

 

We discuss dividends a lot, but it is important for investors to grasp just how powerful dividends can be in growing long-term wealth.

It has been widely reported that between 1930 and 2012, dividends accounted for 41.8% of the markets total return, which clearly illustrates how important they are for the building a successful long-term investing strategy.

Over the last few months the market has shown amazing strength, but at some point things are going to turn. It is not a question of if, but more of a question of when.

We have already started to see some weakness, with the market’s recently experiencing its longest streak of down days since 2011. What we are witnessing may just be a pause in the bull market as investors lock in some recent profits, or it could be a signal that the bears are ready to drive the overall market much lower after hitting record highs.

Regardless of whether we are entering a bearish phase now, or if it will happen sometime down the road, it will happen. When it does, dividend stocks are likely to be partially insulated since investors will seek their yield in times of uncertainty.

Dividend stocks are viewed as a safe heaven in down markets, but stocks with a history of annual dividend increases are given more weight since investors perceive the dividend increases to be a sign of solid management, and management’s belief in the strength of the company’s underlying business.

As a result, stocks that have a track record of dividend increases become highly attractive when the market runs into trouble, which is why now that the market has started to trend lower it is important to seek out companies that are dividend growers.

The following five stocks all have histories of dividend growth, and are likely to extend their streaks during the month of April.

QUALCOMM Inc.

Communication equipment provider QUALCOMM Inc. (QCOM) has a 14-year streak of dividend increases. The company historically announces its dividend increases during the first week of April, and there is no reason to expect the company to deviate from that schedule this year. Last year the company boosted its dividend by 10.4%, and by 14.3% in the previous year. The stock sold off sharply following a fiscal Q1 revenue miss in January, but shares have regained their footing and are in an uptrend ahead of the company’s second-quarter report which is expected on April 19. Look for the dividend increase to be announced at the start of April, with the quarterly distribution rising from $0.53 to around $0.59, which would equate to an 11.3% increase. The stock will trade ex-dividend during the final week of May.

qcom170328

Chart courtesy of www.stockcharts.com

Procter & Gamble

Consumer goods maker Procter & Gamble (PG) gained strength following the presidential election, and the stock is currently trading just shy of its all-time high. The company is a true dividend aristocrat, with a very impressive 60-year streak of dividend increases. The stock has a high payout ratio of 69.4%, so investors should not look for a huge increase, but there is no reason to expect the company will break its streak of increases. Last year the increase was just 0.9%, and in the previous year it increased the dividend by 2.9%. Look for another small increase, with the quarterly distribution rising from $0.669 to around $0.680, for an increase of 1.6%. Expect the announcement during the second week of April, with the stock trading ex-dividend about a week following the announcement.

pg170328

Chart courtesy of www.stockcharts.com

PPG Industries

PPG Industries (PPG) is a dividend aristocrat, with a 44-year streak of dividend increases. The stock currently offers a 1.53% dividend yield, and has a low 25.8% payout ratio. PPG tends to announce its dividend increases during the third week of April, and last year the company boosted its dividend by 11.1%. Given the low payout ratio, there is no reason to expect this to be the year that the company breaks its streak of increases, and the low ratio should result in another strong increase. Look for the quarterly distribution to rise from $0.40 to around $0.44, for an even 10% boost. Look for the announcement during the third week of April, with the stock trading ex-dividend during the first week of May.

ppg170328

Chart courtesy of www.stockcharts.com

Wells Fargo

After being forced to slash its dividend during the financial crisis, Wells Fargo (WFC) has grown its dividend each of the last five years, and will likely make another increase when it announces its next dividend. The company will announce its next dividend during the final week of April, with the stock trading ex-dividend during the first week of May. Wells Fargo has been a top dividend player since returning to revenue growth, and currently offers a yield of 2.7%, with a quarterly distribution of $0.38. Last year the company made a small 1.3% increase to its distribution, and in the previous year the increase was 7.1%. Look for another modest increase this year, with the dividend possibly rising from $0.38 to around $0.395, which would translate to a 3.9% increase.

wfc170328

Chart courtesy of www.stockcharts.com

Apple Inc.

iPhone maker Apple Inc. (AAPL) restarted its dividend program in 2012, and the company has lifted its income each of the last four years. The stock currently offers a 1.6% yield, and has a low 25.5% payout ratio. Pressure mounted on the company to return some of its massive cash hoard to investors, and given the low payout ratio the company will certainly extend its streak of increases this year. Last year Apple boosted its dividend by 9.6%, and by 10.6% in the previous year. Expect this year’s increase to be in the same range, with the quarterly distribution rising from $0.57 to around $0.63, for an increase of 10.5%. Look for the announcement toward the end of April, with the stock trading ex-dividend about a week after the announcement.

aapl170328

Chart courtesy of www.stockcharts.com

Symbols: AAPL PG PPG QCOM WFC
Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

You May Also Like