3 large dividend-paying stocks whose payouts could double


Good dividend yields are good. A stock dividend that doesn’t even keep pace with inflation isn’t much use. But just as important (if not more important) to income-conscious investors is a stock’s dividend growth rate. The longer the expected holding period, the greater the constant growth.

To that end, here’s a look at three stocks that are not only posting good dividend yields, but accelerating their payouts at a surprisingly fast rate. If you are ready and able to hold onto them long enough, you may even see your share payouts double their current levels.

1. Texas Instruments

Dividend yield: 2.2%
Dividend growth rate over 5 years: 20%

Technology name Texas instruments (NASDAQ: TXN) is usually not purchased as income, but that doesn’t mean it’s not ready for use. Its current yield of 2.2% is stronger than the S&P 500the average of 1.4%, and the company is increasing its payouts much faster than most other outfits.

Image source: Getty Images.

Better yet, Texas Instruments can afford its quarterly dividend payments. Despite last year’s challenges related to the coronavirus pandemic, the company managed to increase revenue and results, earning $ 5.97 per share against 2020 dividend payouts per share totaling $ 3.72.

The unlikely budgetary progress of the past year reflects the still marketable nature of Texas Instruments’ product line.

While tech companies love Intel, Advanced micro-systems, and NVIDIA are locked in a perpetual – and cyclical – computer processor competition that requires massive research and development funding, TI’s core markets include all of the other semiconductors soldered to those same motherboards, as well as sensors, audio components, wireless connectivity solutions and Suite.

These things rarely impress manufacturers or consumers. Indeed, they are downright boring. That’s the point, however. Texas Instruments provides at least some technology components for almost anything that consumers or businesses buy year after year. Printers, lighting equipment, data collection equipment, medical devices, televisions, home appliances, network management solutions, broadband networks and digital signage are just a few products that TI has to do.

2. Kroger

Dividend yield: 2%
Dividend growth rate over 5 years: 11.4%

Like the Texas Instruments product lines, Kroger (NYSE: KR) is also a boring name. Even with the sales surge caused by the pandemic last year, groceries are just groceries. Food will never be a growing industry. The fact that the Kroger company is expected to experience a slight decline in sales in 2021, as the proliferation of COVID-19 vaccines brings the United States back to normal, is another factor in deflating the bullish case. Earnings per share are expected to drop from $ 3.47 to $ 2.84 in 2020.

However, don’t let this year’s fiscal lull or the low-margin, slow-growing nature of its business model fool you. While Walmart technically sells more groceries, as the nation’s largest dedicated grocery chain, Kroger’s typical annual profits of around $ 2 billion allow the company to innovate in a way that his peers simply cannot. The aerial drone delivery tests that Kroger began performing earlier this month are one example of such innovations driving sales. The grocer’s experience mirrors similar drone delivery efforts by Amazon and Walmart.

However, Kroger doesn’t just lean into drones to say he can stand side-by-side with his main rivals. This company is focused on creating value for its shareholders and finding new ways (like drones) to do it. Creating more value for stakeholders has not only been a priority since 2018, but the company’s redesign since then has also been guided by answers to questions of creating more value for shareholders.

These little things can mean a lot.

3. Franklin Resources

Dividend yield: 3.4%
Dividend growth rate over 5 years: 9.2%

Finally, add Franklin Resources (NYSE: BEN) to your list of dividend-paying stocks that could double their current quarterly payments in a relatively short order.

If you are not familiar, Franklin Resources is a mutual fund management company. You may know him best as Franklin Templeton, although he also owns Legg Mason. According to the latest snapshot, the company collectively stretches just over $ 1.5 trillion in investor money.

The fund management model is pretty much perfect for funding reliable dividend payouts.

You see, mutual fund companies charge a fixed percentage of investors’ total positions in their funds, regardless of how well or poorly the market (or the fund manager) is performing. While this recurring fee is relatively low, it doesn’t cost much more to manage $ 1 trillion than it does to manage $ 1 billion, which doesn’t cost much more than managing $ 1 million. A larger scale therefore allows disproportionate profitability. The “trick” is just to get people on board in the first place and keep them there once they are, which Franklin has proven.

Be aware that the market environment may try to discourage you from entering Franklin Resources. Analysts collectively rate it slightly below a hold, and the current stock price near $ 33.60 is actually above the consensus price target around $ 31.30. After the sales and earnings beats of the last quarter and a stock price below 11 times this year’s expected earnings, these professionals may be underestimating how well Franklin is positioned to perform in the post environment. -pandemic.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


About Catherine Wilson

Check Also

First Trust Tactical High Yield ETF (NASDAQ:HYLS) Sees Sharp Drop in Short-Term Interest

The First Trust Tactical High Yield ETF (NASDAQ:HYLS – Get Rating) saw a sharp decline …

Leave a Reply

Your email address will not be published.