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, which 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%: a 10% for the increase in stock price and 3% for the dividends paid.
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Four top 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 analysts. While it is always possible that not all of them do indeed raise their dividends, analysts expect them to, and the data is based generally on past increases in the firm’s dividend payouts.
It is important to remember, though, that no single analyst report should be used in making a buying or selling decision.
CDW
This is a backdoor way for more conservative investors to have a technology play in their portfolio. CDW Corp. (NASDAQ: CDW) provides integrated information technology (IT) solutions to business, government, education, and health care customers in the United States, the United Kingdom and Canada.
The company offers discrete hardware and software products, as well as integrated IT solutions, including on-premise, hybrid and cloud capabilities across data center and networking, digital workspace, security and virtualization. Its hardware products comprise notebooks/mobile devices, network communications, desktop computers, video monitors, enterprise and data storage and other hardware. Its software products include application suites, security, virtualization, operating systems and network management.
CDW also provides field services, managed services, warranties, configuration services, partner services and telecom services.
Shareholders currently receive a 0.85% yield. The company is expected to raise the $0.40 per share dividend to $0.42.
Credit Suisse has a $210 price target on CDW stock, while the consensus target is $204.44. The stock was trading on Tuesday near $187 a share.
Estee Lauder
With store traffic returning to normal, and the holidays coming up, this long-time fragrance producer has some outstanding upside potential. Estee Lauder Companies Inc. (NYSE: EL) is one of the world’s leading manufacturers and marketers of prestige skincare, makeup, fragrance and hair care products.
The company’s products are sold in over 130 countries. Brands include Estee Lauder, Clinique, MAC, La Mer, Bobbi Brown, Jo Malone, Origins, Bumble & Bumble, Smashbox, Tom Ford, Aveda, Too Faced and Aramis.
Shareholders currently receive a 0.65% yield. The dividend is expected to go from $0.53 per share to $0.58.
Morgan Stanley’s $365 price target is in line with the $364.88 consensus target. Estee Lauder stock traded near $316 on Tuesday.
Microchip Technology
This company is a huge Internet of Things benefactor and the stock has been very strong recently. Microchip Technology Inc. (NASDAQ: MCHP) is a leading provider of microcontroller, mixed-signal, analog and flash-IP solutions, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide.
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The company acquired Microsemi in June of 2018, and most analysts believe that purchase and earlier acquisitions afford Microchip Technology ongoing mergers and acquisitions linked upside potential from cross-selling (to boost sales) and manufacturing synergies (to reduce costs).
Microchip’s sales, margins and earnings per share are somewhat more levered to the cyclical stabilization and recovery that is now upon us than many peers, owing to its relatively more vertically integrated manufacturing network, significant channel inventory reduction over the past seven quarters and elevated financial leverage.
Microchip Technology stock investors now receive a 1.14% yield. The $0.2185 per share dividend is expected to be raised to $0.2295.
The $95 Morgan Stanley price target compares with the $89.54 consensus target and a recent price shy of $78 a share.
Snap-On
Every do-it-yourselfer with a tool kit is well versed in the products of this great company. Snap-On Inc. (NYSE: SNA) manufactures and markets tools, equipment, diagnostics and repair information and systems solutions for professional users worldwide.
The company’s hand tools include wrenches, sockets, ratchet wrenches, pliers, screwdrivers, punches and chisels, saws and cutting tools, pruning tools and torque measuring instruments. Its power tools include cordless, pneumatic, hydraulic and corded tools. And its tool storage products include tool chests and roll cabinets.
The company also provides handheld and PC-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services and warranty management systems and analytics.
In addition, Snap-On offers solutions for the service of vehicles and industrial equipment that include wheel alignment equipment, wheel balancers, tire changers, vehicle lifts, test lane equipment, collision repair equipment, vehicle air conditioning service equipment, brake service equipment, fluid exchange equipment, transmission troubleshooting equipment, safety testing equipment, battery chargers and hoists. Further, it provides financing programs to facilitate the sales of its products and support its franchise business.
The company serves the aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education industries, as well as vehicle dealerships and repair centers.
The current dividend has a 2.40% yield. The company is expected to lift the $1.23 per share dividend to $1.30.
Tigress Financial just raised its $289 price target on Snap-On stock to $295. The consensus target is just $236.25, and shares were trading near $203 apiece.
These four top companies are expected to lift the dividends they pay to shareholders, and their stocks are rated Buy across Wall Street. 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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