Monday, January 7, 2013

Seven companies expected to grow dividends in 2013

Over the past year, many companies kept increasing dividends. Payouts are expected to reach a record amount in 2012. Despite fears of fiscal cliff, the US economy is doing ok, and corporate profits are also doing well. In a previous article I outlined why I am not worried about the fiscal cliff. Strong profits lead to stable and growing dividend checks. As a result, I expect companies in general to be able to distribute a record amount of cash to shareholders in 2013.

In this article, I have outlined several companies which I expect to reward their shareholders with the gift of dividend growth. Several of these companies have managed to boost distributions for over half a century each. These companies have consistently paid and raised distributions during situations where the top marginal tax rates exceeded 70%. Companies that follow such managed dividend policies are much more likely to keep boosting dividends, especially when their financial conditions are improving.

Johnson & Johnson (JNJ), together with its subsidiaries, engages in the research and development, manufacture, and sale of various products in the health care field worldwide. In 2012 the company raised quarterly dividends by 7%, to 61 cents/share, marking the 50th consecutive annual dividend increase. The five year average dividend growth is 9.10%/annually. Earnings per share are expected to increase to $5.09 in 2012 and $5.49 in 2013. I expect quarterly dividends to increase to 65 – 66 cents/share in 2013. Currently, the stock is attractively valued at 14.30 times earnings and yields 3.50%. Check my analysis of the stock for more information.

The Coca-Cola Company (KO), a beverage company, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. In 2012 the company raised quarterly dividends by 8.50%, to 25.50 cents/share, marking the 50th consecutive annual dividend increase. The five year average dividend growth is 8.70%/annually. Earnings per share are expected to increase to $2 in 2012 and $2.19 in 2013. I expect quarterly dividends to increase to 27 - 27.5 cents/share in 2013. Currently, the stock is attractively valued at 18.90 times earnings and yields 2.80%. Check my analysis of the stock for more information.

McDonald’s Corporation (MCD) franchises and operates McDonald's restaurants in the global restaurant industry. In 2012 the company raised quarterly dividends by 10%, to 77 cents/share, marking the 36th consecutive annual dividend increase. The five year average dividend growth is 20.40%/annually. Earnings per share are expected to increase to $5.31 in 2012 and $5.78 in 2013. I expect quarterly dividends to increase to 85 – 86 cents/share in 2013. Currently, the stock is attractively valued at 16.60 times earnings and yields 3.50%. Check my analysis of the stock for more information.

The Procter & Gamble Company (PG), together with its subsidiaries, engages in the manufacture and sale of a range of branded consumer packaged goods. In 2012 the company raised quarterly dividends by 7%, to 56.20 cents/share, marking the 56th consecutive annual dividend increase. The five year average dividend growth is 11.20%/annually. Earnings per share are expected to increase to $3.96 in 2013 and $4.30 in 2014. I expect quarterly dividends to increase to 60 – 61 cents/share in 2013. Currently, the stock is attractively valued at 18.90 times earnings and yields 3.30%. Check my analysis of the stock for more information.

Philip Morris International Inc. (PM), through its subsidiaries, manufactures and sells cigarettes and other tobacco products. In 2012 the company raised quarterly dividends by 10.40%, to 85 cents/share, marking the 5th consecutive annual dividend increase. The five year average dividend growth is 13.20%. Earnings per share are expected to increase to $5.21 in 2012 and $5.81 in 2013. I expect quarterly dividends to increase to 95 – 96 cents/share in 2013. Currently, the stock is attractively valued at 16.70 times earnings and yields 4.10%. Check my analysis of the stock for more information.

Chevron Corporation (CVX), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. In 2012 the company raised quarterly dividends by 11.10%, to 90 cents/share, marking the 25th consecutive annual dividend increase. The five year average dividend growth is 9 %/annually. Earnings per share are expected to reach $12.55 in 2012 and $12.18 in 2013. I expect quarterly dividends to increase to $1/share in 2013. Currently, the stock is attractively valued at 8.80 times earnings and yields 3.30. Check my analysis of the stock for more information.

United Technologies Corporation (UTX) provides technology products and services to the building systems and aerospace industries worldwide. In 2012 the company raised quarterly dividends by 11.50%, to 53.50 cents/share, marking the 19th consecutive annual dividend increase. The five year average dividend growth is 12.70%/annually. Earnings per share are expected to increase to $5.32in 2012 and $6.06 in 2013. I expect dividends to increase to 59 – 60 cents/share in 2013. The company typically raises distributions every five quarters. Currently, the stock is attractively valued at 16.80 times earnings and yields 2.60%. Check my analysis of the stock for more information.

Full Disclosure: Long JNJ, KO, MCD, PG, PM, CVX, UTX\

Relevant Articles:

Why I am not worried about the Fiscal Cliff and Dividend Tax Hikes
Eleven Dividend Kings, Raising dividends for 50+ years
Best Dividend Stocks for 2013, and beyond
Dividend Investing Goals for 2013

2 comments:

  1. A good list of companies to consider. I currently own 3 of these companies (JNJ, MCD and PG) and have two on my list for future acquisitions (KO and CVX). I'd not heard of UTX before and will definitely check them out.

    PM is the joker in the bunch. It's a highly regarded company that I see a lot of dividend investors talking about, but it only has a 5 year run of increasing dividends. While my small portfolio has been mainly focused upon the Dividend "Aristocrats"/"Champions" (companies with 25+ year records of inceases, name depends on whose list you look at) my firm minimum is going to be 10 years. As such, PM simply isn't an option for me for at least another 5 years. I realise it has many of the values I want in my investments, but I intend to stick to my guns about the 10 year minimum.

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  2. Great list DGI! I do own a couple of the stocks you listed, namely JNJ, KO, MCD, PG and UTX. I might add to my positions in JNJ, KO and MCD and initiate a position in CVX in the near future. As for PG, I'm more hesitant. Earnings have been falling in recennt years. I'll keep watching. I always appreciate such quick lists. Cheers. TDE

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