3 Leading Dividend Stocks Expected To Grow Earnings

Key Points

• Leading dividend stocks that are also showing either strong earnings potential or good chart action, or both, include Interpublic Group, ConAgra Brands and Principal Financial Group. 
• These companies have long histories of paying dividends, and recently increased their shareholder payouts.
• Upbeat earnings forecasts bode well for a company's ability to continue paying a dividend, or even increasing its dividend. 

Steady dividend payers are a smart addition to any portfolio, as they contribute to the investment goal of combining growth with income. Leading dividend stocks that are also showing either strong earnings potential or good chart action, or both, include Interpublic Group of Companies Inc. NYSE: IPG, Principal Financial Group Inc. NASDAQ: PFG, and ConAgra Brands Inc. NYSE: CAG. 

Fortunately, you can use MarketBeat tools to screen for top dividend stocks. That’s a far better process than chasing yield willy-nilly, which can result in losses. Investors have to remember: When a stock’s price falls, its yield rises. In a poor market, many dividend payers can decline in price enough to obliterate their yield. 

In other words, don’t simply chase the highest yield in town; you also want to find stocks with other attributes of quality. Rising revenue and earnings are typically drivers of price growth. You also want to find stocks rising in price, so you have both dividend income and price appreciation in your corner. 

Here are three stocks with solid dividend yields that also meet the criteria for institutional quality investments.

Interpublic Group

It’s no surprise that worldwide advertising agency Interpublic Group, like most of its industry peers, saw revenue growth decline in 2022 as large brands did some belt-tightening.

Nonetheless, the company maintained its long streak of profitability and even saw margins expand. Wall Street still expects earnings growth this year and next, but with higher interest rates and the ever-present threat of a recession, those increases are expected to be in the single digits. 

The company increased its shareholder payout in each of the past 11 years, as you can see using MarketBeat dividend data. Its yield is 3.5%. 

When it announced its most recent dividend increase, in February, the company also said it was authorizing a new program to repurchase up to $350 million of common stock. That’s in addition to any amounts remaining from a repurchase program announced in 2022.  

The stock’s chart shows an orderly 17% pullback from its early February high of $39.52. At this juncture, that’s the next buy point to watch. 

ConAgra Brands 

You may not know the name ConAgra, but you certainly know some of its brands, which include Slim Jim, Duncan Hines, Hunts, Marie Callender’s, Bird’s Eye and Orville Redenbacher, among others. 

The company pays a dividend yield of 3.63%, as MarketBeat dividend data show. That’s higher than the current average dividend within the S&P 500, which is 1.69%. ConAgra increased its payout in each of the past three years. 

For income investors, Conagra Brands offers up a sizable dividend yield of 3.6%, well above the 1.69% average of the S&P 500. Conagra has a long history of paying dividends. Once a company starts increasing dividends, that trend tends to continue, unless earnings decline sharply or a once-profitable company starts reporting losses. 

At the moment, there’s no expectation that this will happen to ConAgra. Analysts are eyeing an earnings increase of 13% this year and another 5% next year.

MarketBeat institutional ownership data show more institutional buyers than sellers in the past year. Institutional inflows also totaled more than institutional outflows, something you want to see in a stock you’re watching. 

Principal Financial Group 

Principal Financial offers health and life insurance products, as well as retirement and investment services. 

The stock’s dividend yield is 3.54%, as MarketBeat’s dividend data show. It has an annualized three-year dividend growth rate of 5.50%, following several years of dividend increases. Earnings growth declined in 2022, but that’s expected to turn around this year, with earnings growth of 3%, growing by another 11% next year.

As with many financials, the stock declined sharply in tandem with news about bank failures, although insurance is a very different line of business. It’s not uncommon to see all stocks in a sector swept lower with bad news about a particular industry. 

Analysts have a price target of $78.64 on the stock, a potential upside of 8.66%, which would bring the stock back to March 9 levels. While that doesn’t sound particularly impressive at this moment, the continued expectation for earnings growth is encouraging.