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Each quarter, I review the US dividend world to see what has happened of late. While we are stuck in a bear market and fear is growing like clouds before the storm around the Euro zone, the sun is rising on dividend stocks! Globally, we have 16% of stocks increasing their dividend for Q3. I’ve looked deeper into each sector and found 9 dividend stocks with increases of over 10%!
Basic Materials: Southern Copper Corp (SCCO) & Newmont Mining (NEM)
Basic materials were shook by high volatility as the price of gold lost 20% of its value in September only but still gained 9% over the quarter. Companies in this sector are now challenged with their ability to use hedging strategies to protect their profits from the commodities variation.
Southern Copper is surfing on the price of copper and surely pays out a great part of its profit to shareholders. With a current dividend over 8%, they have decided to increase their dividend by 10.71% (from $0.56 to $0.62). But beware, they have a pretty high payout ratio. Here are more dividend metrics for you:
Southern Copper SCCO Dividend Metrics:
| Ticker | SCCO |
|---|---|
| Name | Southern Copper Corp |
| Dividend Metrics | |
| Current Dividend Yield | 9,41 |
| 5 year Dividend Growth | 7,39 |
| 1 year Dividend Growth | 53,15 |
| Company Metrics | |
| Sales Growth (1 year) | 37,9 |
| Sales Growth (5 year) | 15,07 |
| Earnings growth | 32,35 |
| P/E ratio | 11,26 |
| Margins growth | -0,1 |
| Payout ratio | 91,89 |
| Return on Equity | 40,02 |
| Debt to Capital Ratio | 0,12 |
I agree with you, Newmont (NEM) does not show a huge dividend yield (1.86%) and would not fit in my portfolio for this reason. However, they recently changed their dividend policy to distribute a dividend according to the fluctuation of the price of gold (you can see more details on how they do it here). For that reason, and the fact they just hiked their dividend by 50%, I thought it was interesting to take a look at their metrics:
Newmont Mining NEW Dividend Metrics:
| Ticker | NEM |
|---|---|
| Name | Newmont Mining Corp |
| Dividend Metrics | |
| Current Dividend Yield | 1,96 |
| 5 year Dividend Growth | 14,87 |
| 1 year Dividend Growth | 77,78 |
| Company Metrics | |
| Sales Growth (1 year) | 23,82 |
| Sales Growth (5 year) | 13,64 |
| Earnings growth | N/A |
| P/E ratio | 13,17 |
| Margins growth | 10,36 |
| Payout ratio | 10,67 |
| Return on Equity | 18,94 |
| Debt to Capital Ratio | 0,14 |
Consumer, Cyclical: McDonald’s Corp (MCD) & Walgreen Co (WAG)
While most of this sector decided to maintain their dividend in order to be more cautious in case of an eventual recession, several big restaurant chains decided to boost their dividends (YUM by 14%, Darden by 35% and MCD by 14.75%). All these restaurants managed to earn more money while efficiently controlling their debt levels. This is why they decided to pay more to their shareholders. Since all restaurants are going after the emerging markets, if there is any economic bounce back, they will be ready to reap the benefits. I wasn’t sure about which one to present, so I decided to go with MDC since Dividend Growth Investor selected it for our Dividend Growth Index. MCD’s dividend yield is now at 3.03%
McDonald’s Corp MCD Dividend Metrics:
| Ticker | MCD |
|---|---|
| Name | McDonald\'s Corp |
| Dividend Metrics | |
| Current Dividend Yield | 3,17 |
| 5 year Dividend Growth | 29,5 |
| 1 year Dividend Growth | 10,91 |
| Company Metrics | |
| Sales Growth (1 year) | 5,85 |
| Sales Growth (5 year) | 5,44 |
| Earnings growth | N/A |
| P/E ratio | 17,83 |
| Margins growth | 4,97 |
| Payout ratio | 48,68 |
| Return on Equity | 34,51 |
| Debt to Capital Ratio | 0,13 |
Another interesting pick in the Consumer Cyclical sector, is Walgreen (WAG). With 65% of its net sales coming from prescription drugs and an aging population, we can understand how Walgreen faces the future with optimism. It has recently increased its dividend yield by 28.57% and has now reached a 2.64% dividend yield.
Walgreen WAG Dividend Metrics:
| Ticker | WAG |
|---|---|
| Name | Walgreen Co |
| Dividend Metrics | |
| Current Dividend Yield | 2,7 |
| 5 year Dividend Growth | 22,44 |
| 1 year Dividend Growth | 27,66 |
| Company Metrics | |
| Sales Growth (1 year) | 7,07 |
| Sales Growth (5 year) | 8,11 |
| Earnings growth | 19,76 |
| P/E ratio | 12,5 |
| Margins growth | 0,44 |
| Payout ratio | 33,56 |
| Return on Equity | 18,56 |
| Debt to Capital Ratio | 0,08 |
Consumer, Non-Cylclical: Philip Morris (PM)
For those who are interested in a big company, paying big dividends with big dividend increases, PM sounds like a good deal (you can read my full PM stock analysis here). PM is currently paying 4.40% in dividends and has increased its payout by 20.31%.
Philip Morris PM Dividend Metrics
| Ticker | PM |
|---|---|
| Name | Philip Morris International Inc |
| Dividend Metrics | |
| Current Dividend Yield | 4,51 |
| 5 year Dividend Growth | N/A |
| 1 year Dividend Growth | 13,03 |
| Company Metrics | |
| Sales Growth (1 year) | 8,68 |
| Sales Growth (5 year) | N/A |
| Earnings growth | N/A |
| P/E ratio | 14,36 |
| Margins growth | N/A |
| Payout ratio | 61,77 |
| Return on Equity | 157,43 |
| Debt to Capital Ratio | 0,15 |
Industrial: General Electric (GE)
Industrials kept braving the high market volatility with important dividend increases despite an economic slowdown. It seems that 2008 expense cuts were beneficial for most of them as they are sitting on a pile of cash. GE is not stranger in this category and hiked its dividend yield by 13.33%.
General Electric GE Dividend Metrics:
Ticker GE
Name General Electric Co
Dividend Metrics
Current Dividend Yield 3,65
5 year Dividend Growth -10,32
1 year Dividend Growth 38,1
Company Metrics
Sales Growth (1 year) -3,38
Sales Growth (5 year) -0,18
Earnings growth -1,05
P/E ratio 12,75
Margins growth -1,19
Payout ratio 42,29
Return on Equity 9,6
Debt to Capital Ratio 2,47
Technology: Intel (INTC), Microsoft (MSFT), Texas Instrument (TXN)
The best of dividend growth right now can be found in technology stocks. Why am I saying they are the best place to invest? Because you can find several solid companies with impressive balance sheets. Many of them are literally sitting on billions of dollars in cash. In my opinion, these stocks will both increase their dividends while showing great capital gains growth. I’m just thinking of INTC which I recently bought along with 3 other stocks. I’m already making 15% on the stock while receiving a chunky 4% in dividends. The funny part is that investors are getting greedy; with Microsoft, the market was disappointed in a 25% dividend increase as they were expecting a 50% dividend raise!
I’m sharing with you 3 great stocks that dominate in their niches, raised their dividends significantly (INTC with 15.89%, MSFT with 25% and TXN with 30.77%) and with the potential to increase their dividend payouts in the future (look at the dividend payout ratios!).
INTC Dividend Metrics:
| Ticker | INTC |
|---|---|
| Name | Intel Corp |
| Dividend Metrics | |
| Current Dividend Yield | 3,58 |
| 5 year Dividend Growth | 13,95 |
| 1 year Dividend Growth | 19,17 |
| Company Metrics | |
| Sales Growth (1 year) | 24,19 |
| Sales Growth (5 year) | 11,01 |
| Earnings growth | 25,53 |
| P/E ratio | 9,82 |
| Margins growth | 1,93 |
| Payout ratio | 30,56 |
| Return on Equity | 25,16 |
| Debt to Capital Ratio | 0,06 |
MSFT Dividend Metrics:
| Ticker | MSFT |
|---|---|
| Name | Microsoft Corp |
| Dividend Metrics | |
| Current Dividend Yield | 3,01 |
| 5 year Dividend Growth | 12,83 |
| 1 year Dividend Growth | 23,08 |
| Company Metrics | |
| Sales Growth (1 year) | 11,94 |
| Sales Growth (5 year) | 9,03 |
| Earnings growth | 23,9 |
| P/E ratio | 10,28 |
| Margins growth | -1,24 |
| Payout ratio | 23,33 |
| Return on Equity | 44,84 |
| Debt to Capital Ratio | 0,05 |
TXN Dividend Metrics:
| Ticker | TXN |
|---|---|
| Name | Texas Instruments Inc |
| Dividend Metrics | |
| Current Dividend Yield | 2,3 |
| 5 year Dividend Growth | 34,08 |
| 1 year Dividend Growth | 8,33 |
| Company Metrics | |
| Sales Growth (1 year) | 33,94 |
| Sales Growth (5 year) | 1 |
| Earnings growth | 16,87 |
| P/E ratio | 11,48 |
| Margins growth | 1,92 |
| Payout ratio | 18,2 |
| Return on Equity | 31,59 |
| Debt to Capital Ratio | 0,1 |
My favorite pick? INTC!
Of all of these big dividend increasing stocks, I prefer INTC. This is why I recently added it to my investment portfolio and I’ve also included it in my Dividend Growth Index picks. What is your favorite? Do you own any of these stocks?
Disclaimer: I own shares of INTC 😉
I have some INTC and I would like to get into MCD at some point.
I’ll skip PM even if the dividend looks very enticing…
I’m long MCD, INTC and PM. I’m a fan of all three companies.
Of all the companies listed that I don’t already own I have looked at GE from time to time, but the debt load scares me a bit. PM has a lot of debt as well, but their ability to produce cash if prototypical.
MSFT becomes more and more interesting, but at this time I keep finding other opportunities.
@Retire by 40,
I like MCD as well. Can’t get my heart to love PM… it has something with tobacco 😉
@Dividend Mantra,
what do you like about MSFT? I’m kind of scared about their direction (internet, gaming console, etc. ).
Fun post.
I don’t invest in tech. INTC and MSFT included – those dividends are VERY attractive though…
Ethically, won’t invest in PM but I could certainly invest in LIQ 🙂
I hope to own MCD at some point.
Mike,
They have adapted a pretty firm and attractive dividend culture. They have A LOT of cash on the balance sheet and very little debt. A lot of room to grow the dividend. Their growth in cloud computing should grow earnings over time.
But, with all that being said…I still find opportunities elsewhere and I also like INTC better in this space just like you.