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 that 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 large cap companies that are Wall Street favorites 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 by some 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.
Eli Lilly
This large cap pharmaceutical stock with solid upside potential is a great pick for conservative investors. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.
The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.
Investors currently are paid a dividend of 1.4%. The company is expected to raise the dividend to $0.94 per share from $0.85.
Truist Securities just raised its $262 price target on the stock to $301. Eli Lilly stock has traded in a 52-week range of $158.05 to $275.87, and shares were changing hands for around $249 on Tuesday.
FMC
This off-the-radar stock offers investors a very solid entry point. FMC Corp. (NYSE: FMC), an agricultural sciences company, provides crop protection, plant health, precision agriculture and professional pest and turf management products.
The company develops, markets and sells crop protection chemicals that include insecticides, herbicides and fungicides used in agriculture to enhance crop yield and quality by controlling a range of insects, weeds and disease, as well as in non-agricultural markets for pest control.
FMC also offers biologicals products, such as bionematicides under the Quartzo and Presence names. The company sells herbicides under the Authority, Boral, Centium, Command and Gamit brands, as well as Isoflex active herbicide ingredients; Rynaxypyr and Cyazypyr active ingredients; and insecticides under the Talstar and Hero brands, as well as flutriafol-based fungicides. It sells its products through independent distributors and co-ops, and national and regional distributors, as well directly to growers.
Investors now receive a dividend of 1.83%. The company is expected to raise the dividend from $0.48 per share to $0.52.
BofA Securities has a $125 price target on FMC stock. The consensus target is $122.33, and shares traded at around $106 on last look.
Fortune Brands Home & Security
With construction and new homes still booming, this is another great value play. Fortune Brands Home & Security Inc. (NYSE: FBHS) provides home and security products for residential home repair, remodeling, new construction and security applications.
Its Plumbing segment manufactures, assembles and sells faucets, accessories, kitchen sinks and waste disposals in the United States, China, Canada, Mexico, Southeast Asia, Europe and South America directly through its own sales force, as well as through independent manufacturers’ representatives to wholesalers, home centers, mass merchandisers and industrial distributors.
The Outdoors & Security segment offers fiberglass and steel entry door systems under the Therma-Tru brand; storm, screen and security doors under the Larson brand; composite decking and railing under the Fiberon brand; and urethane millwork under the Fypon brand. This segment also manufactures, sources and distributes locks, safety and security devices, and electronic security products under the Master Lock and American Lock brands; and fire-resistant safes, security containers and commercial cabinets under the SentrySafe brand.
The current annual dividend yield is 1.00%. The dividend is expected to rise from $0.26 per share to $0.32.
The $127 BofA Securities price target compares with the $118.4 consensus target and a recent share price of $104.70.
24/7 Wall St.Trinity Industries
This stock is a very solid idea for growth investors looking to add quality industrials with the potential for infrastructure and transportation exposure. Trinity Industries Inc. (NYSE: TRN) provides rail transportation products and services in North America.
The company’s Railcar Leasing and Management Services Group segment leases freight and tank railcars; originates and manages railcar leases for third-party investor-owned fund; and provides fleet maintenance and management services to industrial shippers. As of December 31, 2020, it had a fleet of 107,045 owned or leased railcars. This segment serves industrial shipper and railroad companies operating in agriculture, construction and metals, consumer products, energy and refined products and chemicals markets.
The Rail Products Group segment manufactures freight and tank railcars for transporting various liquids, gases and dry cargo. It also offers railcar maintenance and modification services. This segment serves railroads, leasing companies and industrial shippers of products in the agriculture, construction and metals, consumer products, energy, and refined products and chemicals markets.
The All Other segment manufactures guardrail, crash cushions and other highway barriers. It sells or leases products and services through its own sales personnel and independent sales representatives.
Shareholders currently receive a dividend of 2.97%. A two cent per share increase to $0.23 is expected.
Wells Fargo has set a $36 price target. The consensus target is $34.18 and shares traded on Tuesday near $29 apiece.
These four top blue chip 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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