Stocks That Will Boost Their Dividends This Summer: BG, FDX, TGT & MDT

 

The big story with the market in recent weeks has been escalating trade tensions between the U.S. and China. For months both countries appeared ready to reach a deal, but those hopes faded as China balked on a few key points for the U.S. and President Trump responded with a new round of tariffs on the U.S.’s most important trading partner.

It remains in both nation’s best interests to reach a deal sooner than later, but recent developments have made it clear that a deal this complex will not be easy, and the possible timeline has been stretched much further.

With volatility comes investor uncertainty. The U.S. economy remains on very solid ground with a good jobs market and very low unemployment. This has boosted consumer confidence and the current earnings season that is winding down has been generally positive.

Investors want to keep their money at work in the market, but there are enough uncertainties in the market to warrant looking for safety whenever possible. Dividend stocks offer slightly additional safety in a volatile market, and stocks that have a consistent track record of dividend increases provide an additional level of safety in uncertain markets.

Here are a few stocks that will boost their dividends in the weeks ahead.

Bunge (BG)

Bunge (BG) is an agribusiness and food company. Bunge has a 17-year streak of dividend increases, and with a low 38.2% payout ratio the company can easily boost its dividend again when it announces its next distribution which should come any day now. BG traded lower as trade tensions between the U.S. and China led to China putting tariffs on farm goods, but the stock does appear to be in oversold territory at this point and has started to recover. BG trades at just 13 times future earnings which are expected to rise 10% annually over the next five years. The stock currently has a yield of 3.9% and a quarterly distribution of 50 cents per share. Look for the company to boost its quarterly dividend to 55 cents per share for a 10% increase and the stock will trade ex-dividend late August. BG trades at $51.20 and analysts see a lot of upside with an average price target of $69.40.

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FedEx (FDX)

Shipping giant FedEx (FDX) has trended lower over the last 52-weeks, and the stock is currently trading north of its 52-week low. FedEx reports earnings off-cycle and will not report its next set of quarterly numbers until June 18. Analysts expect earnings of $4.90, down from $5.91 during the same period last year. For the current year analysts expect earnings growth of just 1.1%, but the long term forecast is better with forecast five-year profit growth of 8.8% per annum. FedEx typically announces its dividend payments about a week before its quarterly reports, so the next announcement should come around June 10. The company has a nine-year streak of increases. TGT currently has a 1.57% yield and a very low 15.0% payout ratio. Last year the company boosted its dividend by 30%, and while the low payout ratio justifies another big increase this year, the anemic earnings growth for 2019 will most likely result in a smaller increase. Look for the quarterly dividend to rise from 65 cents to around 75 cents for a 15% increase. FDX is trading at $162.71 and analysts have an average price target of $199.80 on the stock.

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Target (TGT)

Retail giant Target (TGT) is coming off an impressive quarterly report that resulted in a 9% jump in the stock, and investors will get another reason to remain bullish on the stock when the company announces its next quarterly dividend. Target was slow to grow its e-commerce business, but recent investments have helped boost online sales to 7% of the company’s total revenue and were up 42% year over year last quarter. Target has a 51-year streak of dividend increases with a 3.3% yield, and a 47.6% payout ratio. The retailer has historically announced its dividend increases during the second week of June. Look for Target to lift its dividend from 64 cents to around 67 cents for a 4.6% increase and the stock to trade ex-dividend mid-August. TGT trades at $78.29 with an average price target of $88.69.

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Medtronic (MDT)

Medtronic (MDT) is a dividend aristocrat with a 41-year streak of dividend increases and the stock is currently yielding 2.27%. The stock has a low payout ratio of 39.1% so the company can easily afford to build on extend its streak of increases. Medtronic is based in Ireland, and the company manufactures medical devices. Earnings growth over the last five years has been a modest 5.5% annually and looking ahead analysts expect more of the same with forecast annual earnings growth of 7.7% for the next five years. Medtronic reports earnings this week which will help drive the stock and could help shares break out from their current sideways pattern. The stock trades at just 16.2 times future earnings so there is upside if the company is able to post better than expected numbers moving forward. The last four quarters Medtronic has topped estimates on both the top and bottom line, and the street expects another earnings beat this week with a whisper number of $1.51. Look for the company to boost its dividend from 50 cents per share to around 54 cents for an 8% increase when it announces its next distribution during the third week of June, and the stock to trade ex-dividend at the stat of July. MDT shares are currently priced at $88.18 while analysts have an average price target of $101.85 on the stock.

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Symbols: BG FDX MDT TGT
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.

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