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Grab These 5 'Strong Buy' Blue Chips Before They Raise Their Dividends This Week
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After years of a low interest rate environment, which has been trending higher over the past 15 months, many investors have turned to equities not only for the growth potential but also for solid and dependable dividends that help to provide a passive income stream. What this equates to is total return, which is one of the most powerful investment strategies going. While interest rates have risen, these companies still make sense for investors looking for solid growth and income potential.
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%: 10% for the increase in stock price and 3% for the dividends paid.
Five top 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 raise their dividends, top analysts expect them to, given past increases in each 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.
American Tower
This wireless tower company is a top pick on Wall Street and an acknowledged industry leader. American Tower Corp. (NYSE: AMT) is one of the largest global owners and operators of wireless and broadcast communications towers.
Its portfolio includes approximately 219,000 sites in the United States, Latin America, India, Europe, and Africa. The core business for the company is leasing space on its wireless towers, primarily to wireless carriers, government agencies and broadband data providers.
On a multiple basis, its shares trade cheaper than the competition, and many top analysts around Wall Street feel the growth potential for the company remains among the best in the industry.
24/7 Wall St.Investors now receive a 3.27% dividend. The company is expected to raise its $1.56 per share dividend to $1.61.
Deutsche Bank has a $245 target price on American Tower stock. The consensus target on Wall Street is $241.13, and shares closed on Monday at $193.47.
Flowers Foods
While off the radar, this defensive consumer staples stock makes sense for nervous investors. Flowers Foods Inc. (NYSE: FLO) produces and markets packaged bakery food products in the United States. Its principal products include fresh breads, buns, rolls, snack cakes and tortillas, as well as frozen breads and rolls, under the Nature’s Own, Dave’s Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley’s and Tastykake brand names.
The company distributes its products through a direct-store-delivery distribution and a warehouse delivery system, as well as operates bakeries. Its customers include national and regional restaurants, institutions and foodservice distributors, and retail in-store bakeries; wholesale distributors; mass merchandisers, supermarkets and other retailers, vending outlets, and convenience stores; quick-serve chains, food wholesalers, dollar stores and vending companies; and public health care, military commissaries, prisons and other governmental institutions.
Flowers Foods stock investors receive a 3.08% yield. The quarterly $0.22 dividend is expected to be bumped to $0.23 a share.
Stephens has set its target price at $28, shy of the $28.83 consensus target. Monday’s closing share price was $25.59.
Insperity
Here is another top idea for investors looking for solid growth and income potential. Insperity Inc. (NYSE: NSP) engages in the provision of human resources (HR) and business solutions to improve business performance for small and medium-sized businesses. It offers its services through its Workforce Optimization and Workforce Synchronization solutions that include a range of human resources functions, such as payroll and employment administration, employee benefits, workers’ compensation, government compliance, performance management and training and development services.
The company also provides Insperity Premier, a cloud-based human capital management platform that offers professional employer organization HR outsourcing solutions to its clients; people management services; and employer liability management services, as well as solutions for the middle market.
In addition, Insperity offers MarketPlace, an e-commerce portal that offers a range of products and services; and Workforce Acceleration, a human capital management and payroll services solution; time and attendance; performance management; recruiting; employment screening; retirement; and insurance services. The company was formerly known as Administaff and changed its name in March 2011.
The current dividend yield is 1.87%. The $0.52 per share payout is expected to increase to $0.58.
Roth MKM’s $139 target price is higher than the consensus target of $135.33. Insperity stock closed on Monday at $113.41 a share.
Lowe’s
This leading home improvement retailer has a low 6% of foreign sales, and it remains a top pick at Goldman Sachs. Lowe’s Companies Inc (NYSE: LOW) has more than 2,000 stores in the United States and Canada. The company has tempered its new store opening plans and is focusing investments on technology and e-commerce capabilities, in addition to improving its retail store productivity.
Lowe’s offers products for maintenance, repair, remodeling and home decorating. It provides home improvement products under the categories of kitchens and appliances; lumber and building materials; tools and hardware; fashion fixtures; rough plumbing and electrical; lawn and garden; seasonal living; paint; home fashions; storage and cleaning; flooring; millwork; and outdoor power equipment. The company also offers installation services through independent contractors in various product categories.
Top analysts have felt for some time that the company’s tool rental business, which is a $1.5 billion revenue opportunity, is a strong catalyst for multiple expansion.
Shareholders currently receive a 2.04% dividend. That dividend is expected to rise by a nickel per share to $1.10.
The BofA Securities target price is $278, while Lowe’s Companies stock has a lower $227.53 consensus target. Monday’s closing print was $203.15.
Medtronic
This medical technology giant is a solid pick for investors looking for a safe position in the health care sector. Medtronic PLC (NYSE: MDT) develops, manufactures, distributes and sells device-based medical therapies to hospitals, physicians, clinicians and patients worldwide. It operates in four segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group and Diabetes Group.
The company announced in 2020 that Blackstone’s life sciences division will invest $337 million into the research and development of its diabetes device technologies. Under the terms of the agreement, Medtronic will receive funding for four diabetes R&D programs over the next several years. Medtronic’s engineering, clinical and regulatory teams will conduct the development work for the programs.
Medtronic stock comes with a 3.06% dividend, but the payout to shareholders is expected to rise to $0.73 per share from $0.68.
The $100 Wells Fargo target price compares with a consensus target of $90.59 and Monday’s close at $89.50.
These five top stocks are rated Buy across Wall Street, and the companies are expected to soon lift the dividends they pay to their shareholders. Not only is increasing dividends and returning capital to investors important, but it also shows that a company is doing well and has the earnings and cash flow strength to increase the payouts.
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