Many income investors are hunting for high-yield stocks. However, it is important to remember that dividend stocks are actually …
Many income investors are hunting for high-yield stocks.
However, it is important to remember that dividend stocks only really deserve your attention if they continue to generate income for you for a long time.
After all, what’s the point in buying mediocre high-performing stocks today just to see their stocks plummet and dividends end up being cut or canceled? Sometimes it makes sense to go after the companies that consistently pay more and more dividends, rather than the firm that simply has the highest return.
The following five large companies deserve attention, either because of the size of their recent growth, or because of their long-term distribution history, or both:
– Apple (ticker: AAPL)
– Chubb Limited (CB)
– Clorox Co. (CLX)
– Lowe’s Cos. (LOW)
– Union Pacific Corp. (UNP)
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Current income: 0.7%
Let’s start with Apple’s mega-tables, which posted a quarterly dividend of 22 cents in May, up 7% from the previous level of 20.5 cents per share in the quarter. Current stock returns remain below 1%, but if you look at the dividend history of other big tech companies, it’s still worth noting that Apple is steadily increasing its payouts.
And let’s face it, since AAPL has surged nearly 450% over the past five years, roughly four times the earnings of the S&P 500, many investors are not even interested in the potential return here. Note that distributions have grown roughly 10% annually over the past five years – and are up over 130% since 2012, when the tech giant recovered its dividend.
This trend shows that CEO Tim Cook and the company are looking for long-term shareholder value, not just a quick win for day traders.
Chubb Limited (CB)
Current income: 1.88%
Insurance giant Chubb for $ 75 billion just approved a fairly modest increase in payouts of about 3% in May, from 78 cents a quarter to 80 cents.
However, as long-time investors know, Chubb deserves attention not only because of its dividend size, but also because of its reliability. The distribution of CB shares has increased once a year for 28 consecutive years to include them on the S&P 500 dividend aristocrats, companies that have increased their dividends by at least 25 founding years – and well-managed financial stocks have enviable money. position and solid balance thanks to regular customer contributions.
This makes it very attractive to long-term investors, and the May dividend hike is further proof that patience can pay off with these stocks.
Clorox Co. (CLX)
Current income: 2.64%
In early June, cleaning products giant Clorox announced a 5% increase in its quarterly dividend from $ 1.11 to $ 1.16 per share. Larger payments will be paid to shareholders on August 13th.
While Clorox is not a giant growth, it has a long history of providing value to shareholders by increasing dividends for approximately 20 straight years and paying out dividends in one form or another for over 50 consecutive years.
Admittedly, CLX stock has been lagging lately as it has pulled back from the peak of the pandemic fueled by huge demand for bleach and other disinfectants. However, dividend yields on these major consumer goods stocks are still quite high and the track record of continued growth is noteworthy.
Lowe’s Cos. (LOW)
Current income: 1.68%
In late May, home renovation giant Lowe’s announced that its dividend would jump to 80 cents per share due August 4th. That’s a huge 33% increase over the previous 60 cents payout and more than double the 35 cents per share. he paid five years ago.
Longer term, it’s worth noting that Lowe’s has paid cash dividends every quarter since it went public in 1961, which is also among Wall Street’s dividend aristocrats.
Management said the recent sharp increase is due to the company’s continued dynamic development, growth trajectory and strong cash flow generation. It is perhaps understandable that stocks performed well in 2021 compared to the broader market with almost 20% annualized returns, up from about 14% or so for the broader S&P 500 over the same period.
Union Pacific Corp. (UNP)
Current income: 1.9%
Famed rail operator Union Pacific announced in mid-May that it had increased its quarterly dividend on its common stock by 10% to $ 1.07 per share from 97 cents earlier.
Moreover, even with such an increase, UNP still pays out less than 50% of its profits for a very convenient and stable distribution schedule that is ripe for future growth.
The company was founded in the 1860s and currently operates over 32,000 miles of track and 8,300 locomotives in its fleet. It’s hard to imagine that this industry giant will face competition anytime soon. And given its strong financial position and recent dividend increases, it might be worth considering a UNP for long-term income-generating investment.
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5 shares with recent dividend increase originally appeared on usnews.com