After years of a low interest rate environment, which currently is trending much higher, 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.
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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.
Three 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.
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It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Caterpillar
This large cap leader is one of the top infrastructure ideas across Wall Street. Caterpillar Inc. (NYSE: CAT | CAT Price Prediction) is the world’s largest manufacturer and marketer of construction equipment, and it is also a leading manufacturer of diesel engines and turbines for transport and industrial applications.
Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three primary segments (Construction Industries, Resource Industries and Energy & Transportation) and also provides financing and related services through its Financial Products segment.
Investors currently receive a dividend of 2.12%. The company is expected to raise the dividend to $1.26 per share from $1.20.
Stifel has a $275 target price for Caterpillar stock, well above the consensus target of $236.58. Monday’s closing share price was $237.90.
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Kroger
This grocery chain giant is always a solid idea when the going gets rough as people tend to go out less, and it is a big Warren Buffett holding. Kroger Co. (NYSE: KR) operates as a retailer in the United States with a focus on combination food and drug stores, multi-department stores, marketplace stores and price impact warehouses.
Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood and organic produce. Its multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products and toys.
The company’s marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys. The price impact warehouse stores provide grocery and health and beauty care items, as well as meat, dairy, baked goods and fresh produce items.
Kroger also manufactures and processes food products for sale in its supermarkets and online, and it sells fuel through 1,613 fuel centers. As of January 29, 2022, the company operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia.
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Holders of Kroger stock receive a 2.25% dividend. The dividend is expected to increase to $0.28 per share from $0.26.
The BofA Securities target price is $75. The consensus target is a much lower $52.13, and Monday’s close was at $46.38.
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W.R. Berkley
This old-school insurance giant is an incredibly smart idea for growth investors now. W.R Berkley Corp. (NYSE: WRB) operates as a commercial lines writer in the United States and internationally through the following two segments.
The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability and general and professional liability lines. It also provides workers’ compensation insurance products; accident and health insurance and reinsurance products; insurance for commercial risks; casualty and specialty environmental products for contractors, consultants and property owners and facilities operators; specialized insurance coverages for fine arts and jewelry exposures; umbrella and excess liability coverage products; and liquor liability and inland marine coverage for small to medium-sized insureds.
In addition, this segment offers commercial general liability, umbrella, professional liability, directors and officers, commercial property and surety products, as well as products for technology and life sciences and travel industries; cyber risk solutions; casualty, group life and crime and fidelity related insurance products; personal lines insurance solutions, including home, condo/co-op, auto and collectibles; automobile, law enforcement, public officials and educator’s legal and employment practices liability, as well as incidental medical and property and crime insurance products; and at-risk and alternative risk insurance program management services.
The Reinsurance & Monoline Excess segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance.
The current yield is 0.70%, but the $0.10 per share dividend is expected to rise to $0.12.
The $84 BofA Securities target price is well above the consensus target of $75.55 and the most recent close at $57.15.
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Three top companies with stocks 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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