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 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 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 at some of the top firms on Wall Street. While it is always possible that not all of them do indeed raise their dividends, top analysts expect them to. 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.
Allstate
Insurance companies tend to do well regardless of the economy, and this sector giant may be an outstanding pick for investors. It was one of the analyst’s top picks for 2021. Allstate Corp. (NYSE: ALL) is the largest publicly traded personal lines insurance company, with about 12% of the personal lines market (one in eight households).
Allstate is primarily a direct writer. Besides a full array of personal lines P/C products (preferred, standard and nonstandard auto insurance, and homeowners’ insurance), the company also offers life insurance and annuity products.
Shareholders currently receive a 2.57% dividend. The insurance giant is expected to raise the dividend nicely, to $0.92 per share from $0.81. The recent UBS upgrade of Allstate stock included a target price hike to $149 from $126. The consensus target is $131.92. The shares traded early Tuesday at $125.10.
24/7 Wall St.Danaher
While off-the-radar for some investors, this top stock is a solid value idea for the rest of 2022 and beyond. Danaher Corp. (NYSE: DHR) designs, manufactures and markets professional, medical, industrial and commercial products and services worldwide. The company operates through three segments.
The Life Sciences segment provides mass spectrometers; cellular analysis, lab automation and centrifugation instruments; microscopes; and genomics consumables. This segment also offers bioprocess technologies, consumables and services; and filtration, separation and purification technologies to the pharmaceutical and biopharmaceutical, food and beverage, medical and life sciences companies, as well as universities, medical schools and research institutions and various industrial manufacturers.
The Diagnostics segment provides chemistry, immunoassay, microbiology and automation systems, as well as hematology and molecular diagnostics products. This segment offers analytical instruments, reagents, consumables, software and services for hospitals, physicians’ offices, reference laboratories and other critical care settings.
The Environmental & Applied Solutions segment offers instrumentation, consumables, software, services and disinfection systems to analyze, treat and manage ultra-pure, potable, industrial, waste, ground, source and ocean water in residential, commercial, industrial and natural resource applications.
Danaher stock investors receive a 0.31%. The dividend is expected to increase to $0.24 per share from $0.21. Wells Fargo’s $334 target price is less than the $342.92 consensus price objective. The share price was $268.10 on Tuesday morning.
24/7 Wall St.Diamondback Energy
This stock has almost doubled since last summer and looks poised to press even higher. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas and New Mexico.
The company primarily focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin, as well as the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin.
Diamondback Energy holds working interests in 4,326 gross producing wells, as well as royalty interests in 4,553 additional wells. In addition, the company owns mineral interests approximately 787,264 gross acres and 24,350 net royalty acres in the Permian Basin and Eagle Ford Shale, and it owns, operates, develops and acquires midstream infrastructure assets, including 927 miles of crude oil gathering pipelines, natural gas gathering pipelines and an integrated water system in the Midland and Delaware Basins of the Permian Basin.
Shareholders receive a 1.52% dividend. The expected dividend increase is to $0.55 share from $0.50. Truist Financial has a $165 price target, and the consensus target is $145.39. Diamondback Energy stock was trading at $134.90.
Foot Locker
Shares of this athletic shoe retailer have rallied from lows and look ready to move higher. Foot Locker Inc. (NYSE: FL) is an athletic footwear and apparel retailer in North America, Europe and Asia. The company’s banners include Foot Locker, Champs Sports, FootAction, Kids Foot Locker, Lady Foot Locker, SIX:02 and Eastbay.
Many Wall Street analysts feel that consumers are bearing price increases from the top companies like Nike, Reebok and Adidas. They also say that currently athletic apparel and footwear companies are continuing to see higher gross margins and return on invested capital, which some think will be a source of multiple expansion.
Shareholders receive a 2.84% yield. Analysts expected the dividend to rise from $0.30 to $0.38. The Foot Locker stock price target at Credit Suisse is $70. The consensus target is just $59.55, and shares recently traded at $42.15 apiece.
24/7 Wall St.L3 Harris Technologies
After its 2019 merger, this is now the sixth-largest defense company. L3 Harris Technologies Inc. (NYSE: LHX) is an agile global aerospace and defense technology innovator engaged in the provision of defense and commercial technologies across air, land, sea, space and cyber domains.
Its Integrated Mission Systems segment includes intelligence, surveillance and reconnaissance; advanced electro optical and infrared; and maritime power and navigation. The Space and Airborne Systems segment comprises space payloads, sensors and full-mission solutions; classified intelligence and cyber defense; avionics; and electronic warfare.
Top Wall Street analysts have felt for some time that the company is situated well in the high growth buckets of the Defense Department budget, and many believe the business is not as short-cycle as the market historically has perceived. Merger synergies give the business a unique path to cash flow and margin upside, along with above-average revenue growth.
Shareholders receive a 1.87% dividend. The hike is expected to be sizable, from $1.02 to $1.21 per share. Wolfe Research has a Wall Street high $266 price target, well above the 52-week high of $246.08. The shares were last seen trading at $220.00.
These five top blue-chip companies that are rated Buy across Wall Street 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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