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The importance of dividends in your portfolio shouldn’t be overlooked, especially when the yields on Treasury securities are next to zero. It’s anyone’s guess when interest rates will move higher, but you don’t have to sacrifice income for your portfolio in the meantime.
Consider the S&P 500 index, which is up 59% over the last 10 years. If you include the dividends, the total return of the S&P 500 is nearly 100%.
But it gets even better. If you focus on companies that consistently up their dividends, your returns could improve even further. This group includes the S&P 500 Dividend Aristocrats, which are stocks that have upped their dividends for 25 years or more.
Since inception in 2013, the total return of the ProShares S&P 500 Dividend Aristocrats ETF (NYSEArca: NOBL) has outperformed the S&P 500 by nearly seven percentage points.
We’ve done the handwork and have found a group of stocks that will be paying investors more this month. Here are the top five dividend hikes for the month of May:
No. 1 May Dividend Increase: MetLife (NYSE: MET)
Insurance giant MetLife is paying a hefty 3.5% dividend yield. It will be upping the quarterly dividend by 7% in May, and plans to pay out $0.40 a share. Shares of MetLife have been under pressure thanks to the uncertainty of the Significantly Important Financially Institution designation – usually reserved for big banks – that brings with it higher regulatory costs.
A judge has declared the SIFI designation doesn’t apply to MetLife. Although the government is appealing this ruling, it’s a win for MetLife. Trading at just 75% of book value, MetLife is enticing and is still one of the best insurance dividends around.
MetLife trades ex-dividend on May 5.
No. 2 May Dividend Increase: International Business Machines (NYSE: IBM)
IBM offers one of the highest dividend yields in the technology space, coming in at 3.6%. It’s upping its dividend by 8% this month and will be paying $1.40 a share in quarterly dividends.
IBM has been struggling as the PC and server market remains under pressure. Shares are down 11% in the last year. However, IBM could be poised to become a major player in the cloud computing market. It’s already looking into cloud apps and blockchain networks. For example, it can target a variety of companies with this technology, from health care to financials. BNY Mellon (NYSE: BK) already uses the technology for securities lending and transferring assets.
IBM trades ex-dividend May 6.
No. 3 May Dividend Increase: Carnival Corp. (NYSE: CCL)
Carnival, the cruise ship company, is upping its quarterly dividend by an impressive 17% this month. It will soon to be paying out $0.35 a share. Its dividend yield is 2.9%.
The key for Carnival is that it’s a major player in the cruise industry, which should do well heading into the summer season. Especially as gas prices remain low and employment continues to rise, more money for households means more travel spending. Lest we forget, the large baby boomer generation is retiring and will likely be looking to spend more money on vacations.
Shares trade ex-dividend on May 25.
No. 4 May Dividend Increase: Bank of Hawaii (NYSE: BOH)
Bank of Hawaii is an underrated bank paying a 2.8% dividend yield and trading near 52-week highs. It’s planning to up its dividend by 7% this month to $0.48 a share.
This regional bank is solely focused on Hawaii, a niche market where it’s managed to get a stronghold. This gives it a distinct advantage over other regional banks that have tried to expand quickly. Bank of Hawaii has managed to create a loyal following in Hawaii that affords it a near 50% presentation rate for Hawaiian households.
Bank of Hawaii trades ex-dividend on May 26.
No. 5 May Dividend Increase: Qualcomm (NASDAQ: QCOM)
Qualcomm pays out the highest dividend yield on our list, coming in at 4.2%. It also has a sizable dividend increase planned. It will be upping its dividend by 10% this month, and will soon to be paying $0.53 a share.
Qualcomm is one of the leaders in smartphone technology, but has fallen on hard times of late as worries rise about whether smartphone growth is peaking. Shares have fallen 23% in the last 12 months.
The key with Qualcomm is that it has two very different businesses that make analyzing and understanding the company difficult sometimes. On one hand it has its chip-making business, which has been hurt by the likes of Samsung deciding to make its own chips instead of outsourcing to Qualcomm. But Qualcomm still has a high margin licensing business, where it licenses its technology to smartphone companies.
Shares tread ex-dividend on May 27.
In the end, dividends are great for your portfolio, but don’t overlook the benefit of companies that consistently up their dividend payments. The five stocks above will soon be paying investors more and are worth a closer look.