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.
Four top large-cap 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 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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Ameren
While lesser known than some of the other companies, this may be a perfect defensive stock to rotate to. Ameren Corp. (NYSE: AEE | AEE Price Prediction) operates as a public utility holding company in the United States engaged in the rate-regulated electric generation, transmission and distribution activities, as well as rate-regulated natural gas distribution and transmission businesses.
The company primarily generates electricity through coal, nuclear and natural gas, as well as renewable sources, such as hydroelectric, methane gas and solar. Ameren serves residential, commercial and industrial customers. It also serves approximately 1.2 million electric customers and approximately 130,000 natural gas customers in central and eastern Missouri.
Shareholders currently receive a 2.73% yield. The company is expected to raise the dividend to $0.575 per share from $0.55.
BMO Capital Markets has a $91 price target on Ameren stock, in line with the $91.31 consensus target. The shares were trading at $81.15 early Monday.
KB Home
This very well-known company could be acquired. KB Home (NYSE: KBH) is one of the largest U.S. homebuilders, with roughly 2% market share. The company builds single-family homes, townhomes and condominiums for first-time, move-up and active adult buyers. It is positioned in roughly 40 markets, with around 70% to 75% of revenues attributable to the West and Central regions. It also provides mortgage services through a joint venture with Nationstar.
Founded in 1957, and the first homebuilder listed on the New York Stock Exchange, the company has built nearly 600,000 homes for families from coast to coast. Distinguished by its personalized homebuilding approach, KB Home lets each buyer choose their lot location, floor plan, décor choices, design features and other special touches that matter most to them.
Shareholders currently receive a 1.54% yield. The company is expected to raise the dividend to $0.21 per share from $0.15, which is a massive 40% increase
The Wedbush price target of $60 compares to the $54.60 consensus target. The stock traded at $38.55 Monday morning.
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RPM International
Long-term growth investors will love this stock. RPM International (NYSE: RPM) manufactures, markets, and sells specialty chemicals for the industrial, specialty and consumer markets worldwide. Its products include the following:
- Waterproofing, coatings and institutional roofing systems
- Air barriers, tapes and foams
- Residential home weatherization systems
- Roofing and building maintenance and related services
- Sealing and bonding, and subfloor preparation, flooring, and in-plant glazing solutions
- Solutions for fire stopping and intumescent steel coating
- Rolled asphalt roofing materials and chemical admixtures
- Concrete and masonry admixtures, concrete fibers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, injection resins, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps and restoration materials
- Insulated building cladding materials and concrete form wall systems
- Polymer flooring systems
- Fiberglass reinforced plastic gratings and shapes
- Corrosion-control coating, containment and railcar lining, fire and soundproofing, and heat and cryogenic insulation products
- Specialty construction products
- Amine curing agents, reactive diluents, specialty epoxy resins and other intermediates
- Fluorescent colorants and pigments
- Shellac-based-specialty and marine coatings
- Fire and water damage restoration, and carpet cleaning and disinfecting products
- Fuel additives
- Wood treatments, furniture finishes and touch-up products
- Nail enamels, polishes and coating components
- Specialty products for paint contractors and the DIYers, concrete restoration and flooring systems, metallic and faux finish coatings, cleaners and hobby paints and cements;
- Caulk, sealant, adhesive, insulating foam, spackling, glazing and patch and repair products.
Shareholders currently receive a 1.94% yield. The company is expected to raise the dividend to $0.40 per share from $0.38.
The $100 BMO Capital Markets price target is above the $95.23 consensus figure. RPM International stock was trading at $79.00.
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Thor Industries
This is another Wall Street favorite that flies low on the radar screen of many investors. Thor Industries Inc. (NYSE: THO) designs, manufactures and sells recreational vehicles (RVs) and related parts and accessories in the United States, Canada and Europe.
The company offers travel trailers; gasoline and diesel Class A, Class B and Class C motorhomes; conventional travel trailers and fifth wheels; luxury fifth wheels; and motor caravans, caravans, campervans and urban vehicles. It also provides aluminum extrusion and specialized component products to RV and other manufacturers; and digital products and services for RVs. The company provides its products through independent and nonfranchise dealers.
Shareholders currently receive a 1.29% yield. The company is expected to raise the dividend to $0.42 per share from $0.41.
Truist Securities lifted its $130 price target on Thor Industries stock to $142. The higher consensus target is $147.44, and shares were trading at $128.15.
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These four top stocks are rated Buy across Wall Street, and the companies 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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