After years of a low interest rate environment, many investors have turned to equities not only for the growth potential but also for solid and dependable dividends that help to provide an income stream. What this equates to is total return, which is one of the most powerful investment strategies going.
We always like to remind our readers about the impact total return can have on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again, total return is the combined increase in a stock’s value plus the dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%: 10% for the increase in stock price and 3% for the dividends paid.
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Three companies are expected to raise their dividends this week, so we screened our 24/7 Wall St. research universe and found that all are rated Buy at some of the top firms on Wall Street. While it’s always possible that not all three raise their dividends, top analysts expect them to, and generally the data is based on past increases in the firm’s dividend payouts. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Cable One
While somewhat pricier that the other companies raising dividends this week, this is a solid idea for growth investors. Cable One Inc. (NYSE: CABO) provides data, video and voice services in the United States.
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The company offers residential data services, a service to enhance Wi-Fi signal throughout the home. It also provides residential video services, such as local networks; local community programming that includes governmental and public access; and other channels, as well as digital video services, including national and regional cable networks, music channel and an interactive and electronic programming guide with parental controls.
In addition, the company offers premium channels that offer movies, original programming, live sporting events and concerts and other features. Its advanced video services, such as whole-home DVRs and high-definition set-top boxes, as well as TV Everywhere product, enables its video customers to stream various channels and shows to mobile devices and computers. Further, it provides residential voice services comprising local and long-distance calling, voicemail, call waiting, three-way calling, caller ID, anonymous call rejection and other features, as well as international calling by the minute services.
Shareholders currently receive a 0.53% dividend. The company is expected to raise the dividend to $2.75 per share from $2.50.
Wells Fargo has a $2,050 price target on the shares, but the Wall Street consensus price objective is up at $2,090.17. The stock was trading at $2,050.00 Monday morning.
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M&T Bank
This is a great regional idea for investors looking to add financials to portfolios. M&T Bank Corp. (NYSE: MTB | MTB Price Prediction) operates as the holding company for Manufacturers and Traders Trust Company and for Wilmington Trust, National Association.
The Business Banking segment offers deposits, business loans and leases and credit cards, as well as cash management, payroll and letters of credit services to small businesses and professionals. The Commercial Banking segment provides credit and banking services for middle-market and large commercial customers. The Retail Banking segment offers demand, savings and time accounts; consumer installment loans, automobile and recreational finance loans, home equity loans and lines of credit and credit cards; mutual funds and annuities; and other services.
The Commercial Real Estate segment offers multifamily residential and commercial real estate credit and deposit services. Its Discretionary Portfolio segment provides deposits; securities, residential real estate loans and other assets; and short and long term borrowed funds, as well as foreign exchange services. The company’s Residential Mortgage Banking segment offers residential real estate loans for consumers and sells those loans in the secondary market, and it purchases servicing rights to loans originated by other entities.
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M&T Bank also provides trust and wealth management, fiduciary and custodial, investment management and insurance agency services.
Shareholders currently receive a 3.14% dividend. That dividend is expected to rise from $1.10 per share to $1.15.
The BofA Securities price target of $180 is well above the $168.69 consensus target. M&T Bank stock was trading at $139.30 early Monday.
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Virtus Investment Partners
This money manager could be a great idea for investors looking to add a financial idea that’s not a bank or major brokerage firm. Virtus Investment Partners Inc. (NASDAQ: VRTS) is a publicly owned investment manager. The firm primarily provides its services to individual and institutional clients. It launches separate client-focused equity and fixed income portfolios. The firm launches equity, fixed income and balanced mutual funds for its clients.
The company invests in the public equity, fixed income and real estate markets. It also invests in exchange-traded funds. It employs a multi-manager approach for its products. The firm employs quantitative analysis to make its investments. It benchmarks the performance of its portfolios against the S&P 500 index. The firm conducts in-house research to make its investments.
Shareholders currently receive a 1.05% dividend. The company is expected to raise the $0.82 per share dividend to $0.90.
Morgan Stanley recently upgraded the shares to Overweight and has a huge $400 price target. The consensus target is just $361.33, and the shares were trading at $310.90 on Monday.
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These three top stocks are rated Buy across Wall Street, and the companies are expected to lift the dividends they pay to shareholders soon. Not only is increasing dividends and returning capital to investors important, but it also shows that the company is doing well and has the earnings and cash flow strength to increase the payouts.
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