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 like to remind our readers about the impact total return has 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 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%. That is, 10% for the increase in stock price and 3% for the dividends paid.
Five blue chip companies are expected to raise their dividends this week, so we screened our 24/7 Wall St. research universe and found that all their stocks are rated Buy at some of the top firms on Wall Street. While it is always possible that not all these companies do 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 also important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Fifth Third Bancorp
This top super-regional bank stock remains incredibly cheap right now. Fifth Third Bancorp (NASDAQ: FITB | FITB Price Prediction) is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent of Fifth Third Bank, National Association, a federally chartered institution.
As of March 31, 2021, the company had $207 billion in assets and operated 1,098 full-service banking centers and 2,383 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, North Carolina and South Carolina. In total, Fifth Third provides its customers with access to approximately 53,000 fee-free ATMs across the United States.
Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2021, had $464 billion in assets under care, of which it managed $58 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses.
Shareholders currently receive a 2.79% dividend. The company is expected to raise the dividend to $0.30 per share from $0.27.
Jefferies has a $46 price target on Fifth Third Bancorp, while the consensus target is $44.04. The stock was trading near $39.30 on Monday.
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JPMorgan
This stock trades at a still reasonable 14.5 times estimated 2021 earnings. JPMorgan Chase & Co. (NYSE: JPM) is one of the leading global financial services firms and one of the largest banking institutions in the United States, with about $2.6 trillion in assets. The company as it is today was formed through the merger of retail bank Chase Manhattan and investment bank J.P. Morgan.
The firm has many operating divisions, including investment and corporate banking, asset management, retail financial services, commercial banking, credit cards and financial transaction services.
Top analysts across Wall Street are very positive on the money center and investment giant. The company has proven that it has the wherewithal to invest continually in people, products and platforms to further its market share base, extending its competitive advantage compared with most of its peers.
Shareholders receive a 2.29% dividend. The company is expected to raise the dividend by a dime per share to $1.00.
Wells Fargo’s massive $200 price target is well above the consensus target of $168.90. JPMorgan Chase stock was trading around $159 a share on Monday.
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Microsoft
This is a more conservative way for investors to participate in the massive cloud growth, and 41% of the funds own the stock. Microsoft Inc. (NASDAQ: MSFT) manufactures, licenses and supports a wide range of software products. The company has transformed its business model from a component-driven model (personal computer, server) to one driven by the need for cloud capacity.
Many Wall Street analysts agree that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offerings, and which continues growing at triple-digit levels. Some have flagged Azure as the biggest rival to Amazon’s AWS service.
Some analysts maintain that Microsoft is discounting Azure for large enterprises, so that Azure may be cheaper than AWS for larger users. The cloud was big in the 2021 earnings reports so far and will remain a growing part of the software giant’s earnings profile.
The current dividend yield is 0.76%. The company is expected to lift the dividend from $0.56 per share to $0.61.
The $340 BofA Securities price target compares with a consensus price objective of $329.18. Microsoft stock traded on Monday near $295.50.
Philip Morris
This company has continued to grow global market share and its stock makes good sense for total return investors now. Philip Morris International Inc. (NYSE: PM) is one of the largest international cigarette producers, with a share of 28% of the international cigarette/heated tobacco market. Key combustible brands include Parliament, L&M and Marlboro, one of the most valuable brands in the world.
The company is commercializing IQOS, a heat-not-burn product, in over 40 markets, which could drive earnings in the years to come. Most on Wall Street believe the company offers superior underlying growth prospects, both near term and long term. The share price has been weak of late as investors have questioned the growth potential of its reduced-risk products, and the overall market weakness has contributed. All of its sales are outside of the United States.
Shareholders receive a stellar 4.63% dividend. The $1.20 per share dividend is expected to rise to $1.23.
Deutsche Bank has set a Wall Street high $120 price target. The consensus target on Philip Morris International stock is $109.57, and the share price dropped below $103 on Monday for the first time in a week.
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Texas Instruments
This old-school semiconductor maker also trounced estimates, but disappointing guidance brought in the sellers. Texas Instruments Inc. (NASDAQ: TXN) is a broad-based supplier of semiconductor components, ranging from digital signal processors to high-performance analog components, to digital light-processing technology and calculators.
Some 65% of the company’s sales are exposed to the well-diversified, business-to-business industrial, automotive, communications infrastructure and enterprise markets. The company is a big Apple supplier, so the long-term outlook for this venerable leader makes it a safer bet for investors with less risk tolerance.
Shareholders now receive a 2.16% dividend. The expected dividend hike is to $1.13 per share from $1.02.
KeyCorp has a $240 price target. The consensus target is just $204.03, and Texas Instruments stock was trading at $191.35 on last look.
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Five blue chip sector-leading companies that all are rated Buy across Wall Street and are expected to lift the dividends they pay to shareholders. 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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