2 Stocks That Could Raise Dividends In June
Longtime readers know that we make a habit each month of featuring stocks that are set to put more cash in investors’ pockets. It’s part of my job over at High-Yield Investing, my premium newsletter. I flag these stocks first for my premium readers so that they can research them and get a head start. Then, I share them with the public.
Ideally, I’m looking for hikes that could happen over the next four to six weeks. I also highlight noteworthy special distributions on the horizon.
We don’t do this just for fun. In a perfect scenario, we find great ideas for consideration in our premium portfolio… Companies posting outsized double-digit increases, and reliable dividend-payers that have been steadily growing payouts for a decade or more.
This month, I have two stocks I’d like to highlight. If you’re looking for a potential addition to your income portfolio, I can’t think of a better place to start. Here’s what I’ve found this month…
2 Upcoming Dividend Hikes
1. Lowe’s (NYSE: LOW) – This massive home improvement retailer paid its first dividend back when John F. Kennedy was President. And it has continued to do so every year since, rewarding shareholders with an annual pay raise every 12 months along the way.
After a half-century, you’d think the pace of those hikes would be slowing down. But the payout has nearly doubled since 2017. The latest uptick was a hefty 33% raise last May that lifted the quarterly distribution to $0.80 per share. Management cited the company’s “business momentum, growth trajectory, and strong cash flow generation.”
Well, not much has changed since then. Lowe’s still welcomes about 20 million shoppers per week to its 2,000 locations. I just made about five trips myself for lumber, screws, and gardening supplies. No doubt that factored into the latest upwardly revised guidance.
Revenues are expected to hit $98 billion in 2022. And with operating margins expanding by 170 basis points over the past 12 months, earnings are tracking towards $13.35 per share.
Roughly one-quarter of that profit has been earmarked for capital expenditures to keep the business growing. But management is committed to returning most of its excess cash flow to stockholders, dishing out $15 billion last year. I’m expecting another meaningful dividend increase within the next month. Beyond that, there are still opportunities to consolidate market share in the fragmented $900 billion home improvement sector.
2. Stanley Black & Decker (NYSE: SWK) – Earlier, I mentioned Sears’ sale of the Craftsman line of tools. That brand (worth $900 million at the time) is now in the hands of SWK.
Spring is in the air – the ideal time to build a backyard deck, mend that wobbly fence, repaint the guest bedroom, and complete other do-it-yourself projects. We’ve already talked about the impact of home improvement tasks on lumber demand. But sprucing up also leads to sales of hammers, tape measures, and saws.
Between Craftsman and its namesake brand, SWK is making the most of this robust demand environment. The company can trace its lineage back to the Civil War when it peddled wrought-iron bolts and hinges. Today, it has grown to become the world’s No. 1 supplier of tools and storage products. Through various retail channels, it sells 50 tools per second in sixty countries worldwide.
Citing price realizations (corporate-speak for “hikes”) and recent acquisitions in the outdoor power equipment sector, the company just posted a healthy 20% increase in second-quarter sales to $4.4 billion. Full-year revenue growth is expected to come in even stronger.
Yet, even without industry tailwinds, this well-run business has always managed to reward stockholders. In fact, it has increased dividend payments for 53 consecutive years and plans to continue returning approximately half of its excess capital through dividends and buybacks.
With the aid of divestitures, management is aiming to return $2.3 billion in capital to stockholders this year.
Following a sharper-than-average uptick in the quarterly payout from $0.70 to $0.79 last July, payouts could rise into the mid-80s within the next couple of months. Meanwhile, the consensus analyst target of $156 implies a potential appreciation of 30% in the stock.
Action To Take
We’ve had a pretty good run of finding solid ideas from this exercise, so it pays to follow along each month. Some of them end up paying off big time. So if you’re looking for a potential addition to your income portfolio, then I can’t think of a better place to start your research…
But remember, just because I highlight stocks that are likely to increase dividends doesn’t necessarily make them “buys.” These are merely ideas to get you started in the hunt for high yields.
If you want to know about my absolute favorite high-yield picks, you need to check out my latest report…
In it, you’ll find 5 “Bulletproof Buys” that have weathered every dip and crash over the last 20 years and STILL handed out massive gains. And each one of them carry high yields, with dividends that rise each and every year. Go here to check it out now.