As my High-Yield Investing subscribers know, I like to keep an eye out for companies that are likely to announce a dividend hike in the coming month.
Staying on top of these potential pay raises for shareholders is important. After all, while finding a good income security is always a good thing, it's even better if we can get in early.
As you'll see in a moment, two of today's dividend-growth candidates come from the tech sector. That's a nice coincidence if you happened to catch my previous article -- in which I pointed out that the tech sector is often an overlooked area for income investors. In fact, the two companies I specifically mentioned in that piece show up as potential dividend-hikers today. I've also highlighted a household staples provider and a utility, both of which are Dividend Aristocrats with decades of uninterrupted dividend growth.
All four businesses are at the top of their respective fields. And all are poised to hike their distributions within a matter of weeks.
So without further delay, here are four stocks that could raise their payouts as soon as next month.
1. Apple (Nasdaq: AAPL) -- As mentioned above, Apple has been changing the notion that tech companies are stingy dividend payers. While the sub-2% yield isn't anything special, it's not due to a flat distribution. The iPhone purveyor has raised its dividend by more than half over the past five years and now dishes out $15 billion annually -- the most of any company in the world.
Between dividends and share repurchases, Apple returned a staggering $275 billion to stockholders from 2012 through mid-2018. Since then, it has added another $100 billion in share repurchase authorizations and upped the dividend by 16%.
Apple typically sets its capital return program for the upcoming year in late April. With $130 billion in net cash and record earnings last quarter, it wouldn't surprise me to see the quarterly dividend pushed to $0.80 per share next month.
The chipmaker was just handed a big legal victory, with a federal judge ruling that Apple infringed on three Qualcomm patents. A jury awarded Qualcomm $32 million in damages. There are other royalty and patent disputes still pending (with much higher stakes). But for now, a win is a win.
Last year at this time, the quarterly payout was raised to $0.62 per share from $0.57. The market will be focused more on the courtroom than the boardroom in the next few months. Still, even with future licensing income in limbo, current earnings leave ample room for another dividend hike. As it stands, QCOM pays a yield of 4.4%.
3. Procter & Gamble (NYSE: PG) -- Procter & Gamble is a consumer products juggernaut with a stable of two dozen billion-dollar brands: Tide laundry detergent, Bounty paper towels, Crest toothpaste, Duracell batteries, and Gillette razors, just to name a few.
Nearly all of these hold a dominant number one or two market-share position in their respective fields. They are found in 180 countries around the globe and reach more than 5 billion consumers. The company racks up $67 billion in annual sales and churns out $15 billion in yearly operating cash flow.
P&G has been the "Old Faithful" of dividend payers. The company hasn't missed a distribution since 1890 (a streak of 128 years) and has raised the payout like clockwork for the past 62 years in a row. While the last few years have been sluggish, management has righted the ship and the company has reported solid growth in 8 of its 10 main product categories this year. The market has responded by driving the stock to a new 52-week high.
The leaner and more profitable company may well have a dividend surprise in store for investors next month.
4. Southern Company (NYSE: SO) -- Southern is one of the nation's largest power generators, with a portfolio of wind, solar, hydro, nuclear, and natural gas power plants that have 46,000 megawatts of capacity. The company also provides electricity and gas utility service to 9 million residential and business customers.
If that weren't enough, it even owns substantial midstream pipeline assets.
Southern has a pattern of hiking distributions in the second quarter, with the latest lifting quarterly dividends to $0.60 per share -- putting the yield at 4.6%. Odds are good that trend will continue. Southern reported solid customer growth last year and has an upbeat 4% to 6% earnings growth outlook for the next few years.
I am anticipating an $0.08-per-share annual increase in 2019, which would be the 72nd consecutive year of equal or higher dividends.
Action To Take
Feel free to research these names further on your own. While none of these stocks qualifies as a "buy" strictly because of the likelihood of a dividend hike, the mere fact that these are candidates for a dividend increase also make them good potential candidates for your portfolio. My High-Yield Investing subscribers and I plan to keep a close watch on these names going forward.