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With interest rates still at historical lows, dividend stocks are still in vogue. But not all dividends are created equal, especially when the S&P 500 is yielding just 1.9%.
Still, week in and week out, there are numerous stocks paying dividends. But sometimes not all of those are “stable,” and in many cases simply paying a dividend isn’t enough. Investors should look for companies that are consistently upping their dividends.
We did the legwork this week and found the top stocks that are upping their dividends, but also that are providing the potential for stock appreciation.
Here are the top three dividend increases of the week:
No. 1 Dividend Increase of the Week: Whirlpool Corp. (NYSE: WHR)
Whirlpool is upping its quarterly dividend payment by an impressive 20% to 90 cents a share. Its dividend yield is 1.9%, but it’s only paying out a modest 30% of earnings via dividends and has upped its annual dividend for four straight years.
Its recent dividend strength comes as Whirlpool has been riding the wave of a housing rebound. The stock is up 200% over the last three years. However, it’s still an enticing stock, trading at a forward price-earnings ratio (based on next year’s earnings estimates) of just 12.
It’s still the largest manufacturer of appliances in the world. With that, its big growth opportunity is further penetration into Asia – namely China – where there’s a bustling middle class.
Whirlpool trades ex-dividend May 13.
No. 2 Dividend Increase of the Week: DuPont (NYSE: DD)
DuPont is upping its quarterly dividend by a modest 4% to 49 cents a share this week, but its dividend yield is a solid 2.6%. Its payout of earnings is just 50%. The company is over 200 years old and has been paying a dividend for over 50 years.
DuPont is a big player in the agriculture market– where food is, and will remain, a necessity. Rising populations and strengthening middle classes are also a positive for DuPont’s agricultural division. It already has plans to spin off its underperforming chemicals business.
But DuPont is currently trying to fight off activist investor Nelson Peltz of Trian Partners, who’s been waging a proxy battle at the company and trying to get four directors on the 12-person DuPont board. If Peltz wins, he’ll be pushing for a bigger breakup of the company. If the company wins, at the least they should have a renewed focus on enhancing shareholder value.
Shares go ex-dividend May 13.
No. 3 Dividend Increase of the Week: BB&T Corp. (NYSE: BBT)
The final dividend increase this week that you should know about is BB&T. It’s upping its quarterly dividend payment by 12.5% to 27 cents a share. Its dividend yield is 2.8% and it’s paying out less than 35% of its earnings as dividends.
It has a strong presence in the South, with a renewed focus on the bustling state of Florida, which is still showing signs of growth in housing. It came through the financial crisis relatively strong, which allowed the bank to make strategic acquisitions, including the recent $2.5 billion acquisition of Susquehanna Bancshares.
The bank is still positioned nicely from a valuation perspective, too, trading at just 1.3 times book value. That’s still well below where we saw BB&T trading at prior to 2008. As well, BB&T is still generating double-digit returns on equity – something that you won’t find at big banks like Citigroup (NYSE: C) or Bank of America (NYSE: BAC).
The stock trades ex-dividend May 13.
Collect Dividend Income Every Month!
We’ve put together a simple calendar that pulls together all the market’s best dividends into a single, easy-to-read document. One look, and you’ll be able to set up a 12-month dividend stream for regular income every month.