After years of a low interest rate environment, which has reversed in a big way over the past 16 months, many investors continue to turn 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.
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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.

Five top large-cap companies that are Wall Street favorites are expected to raise their dividends this week. We screened our 24/7 Wall St. research universe and found that all are rated Buy at some of the top Wall Street firms. While it is always possible that not all five do raise their dividends, top analysts expect them to. Generally, the data is based on 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.

Diamondback Energy

This red-hot energy play looks poised to press higher again. 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.

Diamondback Energy 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.

The company also owns, operates, develops and acquires midstream infrastructure assets, including 770 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.

Investors receive a 6.24% dividend, which is of the variable variety, which means it could change depending on production and profits. The company is expected to lift the dividend in a big way, from $0.80 to $1.03.

The $190 Raymond James target price accompanies a Strong Buy rating. Diamondback Energy stock has a consensus target of $167.59, and the closing share price on Friday was $145.64.

KLA

This is a strong large-cap play for investors looking for exposure to capital equipment. KLA Corp. (NASDAQ: KLAC) designs, manufactures and markets process control and yield management solutions worldwide.
KLA offers chip manufacturing products, such as front-end defect inspection tools, defect review systems, advanced packaging process control systems, metrology solutions, in-situ process monitoring products and lithography software; wafer manufacturing products comprising surface and defect inspection, wafer geometry and nanotopography metrology and data management; and reticle manufacturing products, such as defect inspection and pattern placement metrology products.
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The company also provides light emitting diode (LED), power device and compound semiconductor manufacturing products consisting of patterned wafer inspection, defect inspection, surface metrology and data management products; thin-film head metrology and inspection, virtual lithography, in-situ process monitoring, transparent and metal substrate inspection and data management products for data storage media/head manufacturing; and stylus and optical profiling and optical inspection products for microelectromechanical systems manufacturing, as well as products for general purpose/lab applications.

Shareholders currently receive a 1.08% dividend. The expected dividend hike is to $1.45 from $1.30. J.P. Morgan has a $560 price objective on KLA stock. The consensus target is just $465.11, while the most recent close was at $511.01.

Papa John’s

This well-known pizza company is always a solid play for more conservative investors. Papa John’s International Inc. (NASDAQ: PZZA) operates and franchises pizza delivery and carryout restaurants.

Its Domestic Company-Owned Restaurants segment consists of the operations of all domestic company-owned restaurants and derives its revenues principally from retail sales of pizza and side items, including breadsticks, cheese sticks, chicken poppers and wings, dessert items and canned or bottled beverages.

The North America Commissaries segment consists of the operations of regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic company-owned and franchised restaurants in the United States and Canada.

The North America Franchising segment consists of franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from franchisees located in the United States and Canada.

Papa John’s International stock now comes with a 2.02% dividend, but the $0.42 per share payout is expected to rise to $0.45. The BofA Securities target price of $106 is higher than the $92.40 consensus target. The shares closed on Friday at $83.33.

Sturm Ruger

Gun owners are familiar with this top company that pays a stellar dividend. Sturm, Ruger & Co. Inc. (NYSE: RGR) engages in the design, manufacture and sale of firearms to domestic customers.
The Firearms segment manufactures and sells rifles, pistols and revolvers principally to a number of federally licensed, independent wholesale distributors primarily located in the United States. The Castings segment manufactures and sells steel investment castings and metal injection molding parts. The company was founded by William B. Ruger in 1949 and is headquartered in Southport, Connecticut.
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The current dividend yield is 2.42%. That dividend is expected to increase to $0.39 per share from $0.32. Lake Street Capital has set a $64 price target, while the Wall Street high target is $70. Sturm Ruger stock closed on Friday at $52.90.

Wingstop

This stock has solid upside potential, and after getting pummeled last week and is offering a great entry point. Wingstop Inc. (NASDAQ: WING) operates and franchises more than 2,000 locations worldwide.

The company is dedicated to serving the world flavor through an unparalleled guest experience and offering of classic wings, boneless wings and tenders, always cooked to order and hand-sauced-and-tossed in fans’ choice of 11 bold, distinctive flavors. Wingstop’s menu also features signature sides including fresh-cut, seasoned fries and freshly made ranch and bleu cheese dips.

With a vision of becoming a Top 10 Global Restaurant Brand, the company’s system is composed of independent franchisees, or brand partners, who account for approximately 98% of Wingstop’s total restaurant count. In fiscal year 2022, Wingstop’s systemwide sales increased 16.8% to approximately $2.7 billion, marking the 19th consecutive year of same-store sales growth.

Investors receive just a 0.46% dividend, and the expected increase is to $0.21 per share from $0.19. Wingstop stock has a $229 target price at Northcoast Research. The consensus target is lower at $213.88. Friday’s $164.63 close was down over 8% on the day.

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These five top stocks are rated Buy across Wall Street, and the companies 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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