Years of a low interest rate environment have reversed over the past 18 months. Yet, many investors continue to turn to equities. They offer not only growth potential but also solid and dependable dividends that help to provide an income stream. What this equates to is total return, one of the most powerful investment strategies.
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We like to remind our readers about the impact total return has on portfolios. It is one of the best ways to help improve the chances for overall investing success. 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.
Four top large cap companies that are Wall Street favorites are expected to raise their dividends this week. The stocks are rated Buy at some of the top firms on Wall Street. While not all four may raise their dividends, top analysts expect them to. This is based on 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.
Commercial Metals
This top stock has backed up some recently and is offering an outstanding entry point. Commercial Metals Co. (NYSE: CMC | CMC Price Prediction) manufactures, recycles and fabricates steel and metal products in the United States, Poland, China and elsewhere.
The company processes and sells ferrous and nonferrous scrap metals to the following:
- Steel mills and foundries
- Aluminum sheet and ingot manufacturers
- Brass and bronze ingot makers
- Copper refineries and mills
- Secondary lead smelters
- Specialty steel mills
- High-temperature alloy manufacturers
Its finished long steel products include reinforcing bar, merchant bar, light structural, and other special sections, as well as semi-finished billets for rerolling and forging applications.
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In addition, Commercial Metals provides fabricated steel products used to reinforce concrete primarily in the construction of the following:
- Commercial and noncommercial buildings
- Hospitals
- Convention centers
- Industrial plants
- Power plants
- Highways, bridges and dams
- Arenas and stadiums
It sells and rents construction-related products and equipment to concrete installers and other businesses. The company also manufactures and sells strength bars for the truck trailer industry, special bar steels for the energy market and armor plates for military vehicles. Other manufactured products include rebar, merchant bars and wire rods. And the company sells fabricated rebars, wire meshes, fabricated meshes, assembled rebar cages and other fabricated rebar by-products to fabricators, manufacturers, distributors and construction companies. (The states benefiting most from Biden infrastructure policies.)
Investors receive a 1.34% dividend. The company is expected to lift its $0.16 per share payout to $0.18.
UBS has a $63 target price on Commercial Metals stock. The consensus target is $61.60, and Monday’s closing share price was $48.06.
MSC Industrial Direct
This industrial services giant makes sense for long-term growth investors. MSC Industrial Direct Inc. (NYSE: MSM) distributes metalworking and maintenance, repair and operations (MRO) products and services in North America and the United Kingdom.
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The company’s MRO products include cutting the following:
- Tools
- Measuring instruments
- Tooling components
- Metalworking products
- Fasteners
- Flat stock products
- Raw materials
- Abrasives
- Machinery hand and power tools
- Safety and janitorial supplies
- Plumbing supplies
- Materials handling products
- Power transmission components
- Electrical supplies
MSC Industrial Direct offers approximately 2.1 million stock-keeping units through the following:
- Catalogs and brochures
- E-commerce channels, including its website
- Inventory management solutions and customer care centers
- Customer fulfillment centers
- Regional inventory centers and warehouses
It operates through a distribution network of six customer fulfillment centers, 10 regional inventory centers and 38 warehouses. The company serves individual machine shops, Fortune 1,000 manufacturing companies and government agencies. It also serves manufacturers of various sizes.
Shareholders currently receive a 3.17% dividend. The $0.79 per share dividend is expected to increase to $0.83.
Baird’s target price is $110, and MSC Industrial Direct stock has a consensus target of $104.60. The stock closed on Monday at $101.32.
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Penske Automotive
This company was started by automotive and racing legend Roger Penske. Its shares also have backed up to offer a better spot to buy. Penske Automotive Group Inc. (NYSE: PAG) is a diversified transportation services company. It operates automotive and commercial truck dealerships in the United States and internationally under franchise agreements with various automotive manufacturers and distributors.
Penske Automotive is also involved in the following:
- Sale of new and used motor vehicles
- Maintenance and repair services
- Sale and placement of third-party finance and insurance products
- Third-party extended service and maintenance contracts
- Replacement and aftermarket automotive products
- Collision repair services
- Wholesale of parts
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In addition, it operates a heavy- and medium-duty truck dealership that offers Freightliner and Western Star branded trucks, as well as offers a range of used trucks. Further, it imports and distributes Western Star heavy-duty trucks, MAN heavy- and medium-duty trucks and buses, and Dennis Eagle refuse collection vehicles. The company distributes diesel and gas engines, and power systems as well. (The 15 most fuel-efficient trucks.)
The current dividend yield is 1.69%, but the company is expected to lift the $0.72 per share to $0.78.
Benchmark’s $196 target price is well above the $168.40 consensus target, and Monday’s close at $155.83.
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Thor Industries
This is another Wall Street favorite that flies low on the radar screen of many investors. Thor Industries Inc. (NYSE: THO) designs, manufactures and sells recreational vehicles (RVs) and related parts and accessories in North America and Europe. (The strangest roadside attractions in every state.)
The company offers the following:
- Travel trailers
- Gasoline and diesel Class A, Class B and Class C motorhomes
- Conventional travel trailers and fifth wheels
- Luxury fifth wheels
- Motor caravans, caravans camper vans and urban vehicles
It also provides aluminum extrusion and specialized component products to RV and other manufacturers, as well as digital products and services for RVs. The company provides its products through independent and nonfranchise dealers.
Thor Industries stock comes with a 1.94% yield, but the expected dividend hike is to $0.46 per share from $0.45.
The $115 BMO Capital Markets price target compares with a $91.50 consensus target. The stock closed on Monday at $90.14.
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These four top companies with shares 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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