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Dividends are a big part of investors’ portfolios, and a part that shouldn’t be overlooked.
Certainly, dividends can make a huge difference in just a few years’ time. Over the last five years, the S&P 500 is up 78%. However, the total return (including dividends) for the S&P 500 over the same period is nearly 100%.
Investors can maximize the difference that dividends can provide by focusing on companies that have a rock-solid record of increasing dividend payments.
To illustrate, consider the First Trust Morningstar Dividend Leaders ETF (NYSE: FDL), which focuses on consistent dividend payers like utilities and telecoms. This ETF’s total return is up nearly 43% for the last three years, which is nearly double the return of the S&P 500.
We appreciate that focus on top-notch dividend-payers. As we begin the new year, we’ve found five stocks raising their dividends in January.
Here are the top five dividend-payers delivering more this month:
Dividend Increases: AbbVie (NYSE: ABBV)
AbbVie is increasing its quarterly dividend by 12% this month to $0.64 a share. It’s been one of the great dividend stories for a long time; the company has a record of raising its annual dividend for 44 straight years. And its dividend yield is a solid 4%.
It’s also one of the cheapest health-care plays around, trading at less than 12 times next year’s earnings estimates. AbbVie is a great buying opportunity today; the price has been depressed by the worries over the company losing patent protection for its blockbuster drug, Humira. But those worries are overblown. AbbVie has plenty of pipeline drugs in the works, as well as top-selling drugs like Imbruvica for oncology. That means there is plenty of growth left in the AbbVie tank to support more dividend increases. Shares traded ex-dividend Jan. 11.
Dividend Increases: Abbott Laboratories (NYSE: ABT)
This AbbVie spinoff is increasing its quarterly dividend by just a couple percent to $0.265 a share. But its dividend yield is a solid 2.7% and it’s paying out less than half its earnings via dividends. Abbott Labs spun off from AbbVie years ago to focus on medical devices and the like. It also recently bought up St. Jude Medical, giving it an even bigger presence in the market.
However, shares are down 4% over the last year and looks to be a solid buying opportunity. The uncertainty of the St. Jude deal has created a perfect storm. Still, this deal and others will be long-term positives for the company as it carves out a stronghold in the cardiovascular disease market. Shares traded ex-dividend Jan. 11.
Dividend Increases: Hormel Foods (NYSE: HRL)
Hormel is one of the best dividend payers around, albeit underrated. Hormel is upping its quarterly dividend 17% this month to $0.17 a share. It’s managed to up its annual dividend for 50 straight years and offers a 1.9% dividend yield.
The beauty of Hormel is that it’s a bet on rising protein consumption worldwide. The demand for meat is on the rise, especially as we see the continued urbanization of developing countries. As well, the company is focused on getting into the organic and natural foods market, with its acquisition of Applegate Farms last year. Hormel is also invested in the protein market beyond just meat, with its Muscle Milk brand. It’s truly a big bet on continued protein consumption. Shares traded ex-dividend Jan. 12.
Dividend Increases: WD-40 Co. (NASDAQ: WDFC)
WD-40 is an underrated company, and its dividend is also underrated: WD-40 has increased its dividend for five straight years. WD-40 is raising its quarterly dividend by 17% this month to $0.49 a share . . . now yielding 1.6%.
WD-40 been one of the great investing stories over the last decade, with shares up 260% over the last 10 years. It operates in nearly 180 countries selling household and lubrication goods. Its core product, WD-40, a multi-use cleaner and rust-preventative lubricant, will continue to do well over the next decade — helping support its strong dividend. Shares trade ex-dividend Jan. 18.
Dividend Increases: CVS Health (NYSE: CVS)
CVS Health pays a 2.5% dividend yield and its dividend is getting a bit better this month. CVS is raising its quarterly dividend by 18% to $0.50 a share. The company has a nine-year streak of consecutive dividend increases and is only paying out 35% of its earnings via dividends.
CVS has had some hardships recently. The pharmacy benefits industry feels the pressure of a looming Obamacare repeal. However, CVS has huge cash flows and is a large-scale pharmacy retailer and benefits manager. In addition, the rapidly aging population in the U.S. is a positive for companies like CVS. Shares are down 13% in the last year and trading at an attractive valuation. Shares trade ex-dividend Jan. 20.