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As fourth-quarter earnings season winds down, 72% of S&P 500 companies have exceeded earnings estimates – ahead of the 71% average beat rate from the past year. Earnings for the holiday quarter are 8.5% higher than they were last year, a better rate than in any of the previous five quarters.
As U.S. companies rake in more cash, many of them are upping their dividend payouts. The current dividend growth among S&P 500 companies is 12%, below the 2012 rate but well ahead of the 25-year average of 5.4% growth.
This year, S&P 500 companies are expected to pay a record $339 billion in dividends, 8.9% more than the $312 billion they paid last year.
As my colleague Steve Mauzy wrote last week, an increasing dividend often goes hand in hand with a rising share price. As Steve put it, “As the dividend goes, so goes the share price.” Knowing this, more and more companies want to increase their dividends. It’s good for business, appeasing current shareholders and attracting new ones.
With so many companies increasing their dividends, it’s important for income investors to be aware of which ones are doing it at any given time.
The 5 Best Dividend Stocks to Buy in March
Coca-Cola (NYSE: KO)
Even with sales stagnating of late, Coca-Cola is upping its dividend next month. On March 12, the soda giant will bump its quarterly dividend by 9%. At its current share price, that will give Coca-Cola a yield of 3.3% – a better yield than rival Pepsi (NYSE: PEP). Plus, the company’s recent deal to buy a 10% stake in Green Mountain Coffee Roasters (Nasdaq: GMCR) opens up a whole new avenue of potential cash flow, a development that could offset Coca-Cola’s slumping soda sales.
Dr Pepper Snapple Group (NYSE: DPS)
Dr Pepper Snapple is another beverage giant rewarding its shareholders. The company is increasing its quarterly payout by 8%, to 41 cents from 38 cents, on March 13. Including the March increase, the company has now nearly tripled its dividend since initiating one back in late 2009. DPS’ yield is now up to 3.24%.
General Motors (NYSE: GM)
Want proof that that U.S. auto industry has recovered? General Motors, a company that went bankrupt in 2009, is initiating its first dividend in six years. The top U.S. automaker hasn’t paid a dividend since June 2008. Starting Mach 28 – and available to shareholders of record by March 18 – GM will pay a dividend of 25 cents a share. That’s good for a yield of 3.3%, putting it in line with rival Ford’s (NYSE: F) 3.3% yield.
Las Vegas Sands (NYSE: LVS)
Income investors could do worse than rolling the dice with this gambling company. Las Vegas Sands – the largest gambling company in the world by market value, is increasing its dividend by a whopping 43% on March 21. What was a 25-cent dividend when it was initiated two years ago has now doubled to 50 cents a share. The 2.5% yield is somewhat modest. Given how rapidly Las Vegas Sands’ dividend is growing, however, its yield is sure to rise in the coming years.
Cisco (Nasdaq: CSCO)
The technology sector is becoming the new frontier for income investors. A number of tech companies have initiated dividends in recent years, helping erase the sector’s reputation for being stingy with its investors. Cisco has been an especially strong model for dividend growth: since initiating a dividend in March 2011, its payout has more than tripled. The latest increase will come on April 1, when the chip maker boosts its quarterly payment to 19 cents from 17 cents – a 10.5% increase. The result is a 3.4% yield.
Mega-dividends
Ian Wyatt has found 3 stocks that pay dividends so big — you can retire on them. The Wall Street Journal calls them, “mega-dividends.” These stocks have a history of consistently RAISING their dividends… quarter after quarter. In fact, one of these cash-cranking companies hiked its dividend 10-fold! So, if these ever-increasing payouts sound good to you… Click here for all the details.