Avoid dividend stocks that don’t raise payouts. If a dividend-paying company is doing well, it should generally have room to increase its dividend, even if by a small amount. Not only is this a good indicator that the business is doing well, but it also means more dividend income for you. The three companies that raised their dividend payments this month are: Realty Income (NYSE: O), Target (NYSE: TGT)and FedEx (NYSE: FDX).
1. Realty Income
Realty Income makes monthly dividend payments, and real estate investment trusts (REITs) make good, diversified income investments. The REIT portfolio includes a mix of tenants from all areas of the economy. Don’t just focus on apartments or hospitals. However, there are more than 1,500 clients spread across 89 industries.
REITs often make multiple dividend increases throughout the year, but because of their monthly payouts, they’re often not large. On June 11, the REIT announced that its monthly dividend would once again rise, from $0.2625 to $0.2630. The payment, scheduled for July, is 16% higher than what investors paid five years ago – $0.2265. A stock yield of 5.9% means you can collect more than four times the average. S&P 500 stocks, where the average yield is around 1.3%.
This year, the REIT expects normalized funds from operations per share to be between $4.17 and $4.29, pays an annual dividend of 3.16 $. Realty Income’s high dividend yield may not remain high if interest rates fall; by then, the stock could be rallying. For income investors, now is a good time to buy shares of these top dividend stocks.
2. Target
Among the main reasons investors like to own Target stock is for the Minneapolis retailer’s growing dividend. At 3.2%, investors have been able to get an above-average payout from retail stocks. What sweetens the deal is that Target is also the Dividend King, has raised its payout for not only the year but decades.
That’s why Target’s latest dividend hike announced this month was business as usual, without much fanfare. The company said it raised its dividend at a modest 1.8% rate, as it extended its dividend growth to 53 years in a row. But Target has grown even bigger in recent years, having benefited from a pandemic-driven surge in traffic to its stores. The new quarterly dividend of $1.12, due in September, is 70% higher than the $0.66 paid to shareholders five years ago.
It hasn’t been a good year for Target stock, as it’s only up 1% since January. But with a low valuation of 16 times earnings and being a leader in the retail industry, this could be a solid income generating stock to buy and hold for the long term.
3. FedEx
The biggest dividend increase on this list is from logistics company FedEx. The company pays a 10% dividend per share and has an annual dividend yield of $5.52.In five years, the company has doubled its dividend payout. Despite the increase, the stock’s current yield is 2.2%, which is still the lowest level on this list.
FedEx stock is down this year. The economic situation has not improved, and this has been reflected in the company’s results as sales have fallen due to weaker demand. Through the nine-month period ending February 29, the company’s revenue totaled $65.6 billion and was down 4% from the same period last year.
The good news is that if economic conditions improve, the company should do better in the future. It’s currently trading at just 11 times estimated future earnings, and could be a steal today for dividend and growth-oriented investors.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions and recommends FedEx, Realty Income, and Target. The Motley Fool has a disclosure policy.
3 Dividend Stocks That Recently Raised Their Payouts was originally published by The Motley Fool
