3 Stocks to Buy on Recent or Expected Dividend Hikes

Dividend stocks should hold a place in every investor’s portfolio. Even if you don’t intend to use the dividend payout as regular income, the ability to reinvest dividends is like giving yourself a raise every quarter. 

As with any investment, not all dividend stocks are the same. The ones you want to watch for are companies that have a habit of regular dividend increases. The best of the best are Dividend Aristocrats and/or Dividend Kings. These are companies that have increased their dividends for 25 years or 50 years respectively.  

The ability of a company to regularly increase its dividend is an indication of a company that has a strong balance sheet, and in many cases is more indicative of the stock’s worth as an investment than a dividend yield, which can be misleading. 

However, to claim the dividend you have to be a shareholder of the stock by the company’s ex-dividend date. The ex-dividend date is typically set about 60 days after the company announces its dividend and about 30 days before the dividend is issued.  

With that in mind, here are three companies who have recently announced or are likely to announce dividend increases. Any of these companies would make solid additions to the income side of a portfolio. 

The first company I’d recommend is Microsoft (NASDAQ: MSFT). In addition to announcing a six-cent-per-share dividend increase, the tech giant also announced a share buyback program. The company’s three-year dividend growth is over 31%, which is exceptional. And this is an example of a stock that is also making growth investors happy. Since the correction at the start of the Covid-19 pandemic, MSFT stock has seen its share price rise 102% as of this writing. The success of Microsoft Teams to facilitate the need for remote work as well as remote learning will likely continue to be a catalyst for some time. Analysts still foresee a nearly 10% upside for the stock from its current price at around $303 per share. 

My next recommendation is Texas Instruments (NASDAQ: TXN). Shares of TXN stock have been flat since the company reported earnings on July 30. Some of the concern is understandable. The company does a high percentage of its business in the automotive sector and right now that’s a sector that’s under a lot of pressure. As evidence of that Texas Instruments did lower its guidance for earnings and revenue for the current quarter. However, analysts are projecting the company will announce a dividend hike of 12 cents a share possibly as early as September 17. That would be on part with the company’s dividend increase for the last two years. The company’s three-year dividend growth is over 75%.  

The last of my recommendations is JPMorgan Chase (NYSE: JPM). If you’re going to invest in one of the big banks, it’s hard to make an argument that doesn’t include JPM stock. One reason for that is the company’s dividend. Analysts are projecting that the company will increase its dividend by 10 cents a share. The company’s three-year dividend growth is over 76%. The bank has also been seeing strong growth in deposit accounts and that will likely continue until, and unless, the Federal Reserve starts to remove liquidity from the economy. And even if that occurs sooner rather than later, JPMorgan will likely be a winner because they will be able to charge a higher interest rate on their loans.