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Dividend Stock Advisor

 Dividend Stock Advisor

4 Companies We Expect to Boost Dividends

By David Peltier | 03/30/15 - 11:41 AM EDT
Stocks in Focus: TGT, CFR, JNJ, ARG

In addition to model portfolio holding Sonoco Products (SON), which we highlighted last week, here are four names from the S&P SuperComposite 1500 Index that we believe will increase dividends in the second quarter.

Each company currently yields more than 2%, which is both the average yield of the S&P 500 index and the yield of the benchmark 10-year U.S. Treasury note.

In addition, these companies have boosted payouts at least 10 consecutive years, are expected to grow earnings in the current year and can cover the dividend at least 2x with expected full-year earnings. Readers will also note these four stocks represent four different sectors of the market, in the interest of seeing that investors maintain a diversified portfolio.

Two names that don’t appear on this list, but likely would have a year ago, are Chevron (CVX:NYSE) and ExxonMobil (XOM:NYSE). CVX has increased its payouts 27 consecutive years, while XOM has for 32 consecutive years. But with recent fourth-quarter earnings reports, we seen how even the largest, most-diversified energy companies have seen their earnings power be decimated in the past six months because of lower underlying commodity prices.

Consumer

Target (TGT:NYSE) will likely raise its quarterly dividend in June. The retailer currently pays out $0.52 a share (2.5% yield) each quarter, which can be covered 2.2x with expected fiscal 2016 (ending January) earnings of $4.55 a share. In addition, the company’s bonds are A-rated.

Financials

Cullen/Frost Bankers (CFR) is expected to boost its quarterly dividend for the 21st-consecutive year in April. The Texas- based bank currently pays out $0.51 a share (2.9% yield) each quarter, which is equal to 45% of expected 2015 earnings. The company is also one of the few financial institutions we know of that did not reduced its dividend during the crisis of 2008/2009.

Healthcare

Johnson & Johnson (JNJ) will likely raise its quarterly dividend for the 53rd-consecutive year in April. The drugmaker currently pays out $0.70 a share (2.8% yield) each quarter, which can be covered 2.2x with expected 2015 earnings of $6.20 a share. The company’s bonds are also AAA-rated.

Materials

Airgas (ARG) is expected to increase its quarterly dividend in May. The industrial and maker of specialty gases currently pays out $0.55 a share (2.1% yield) each quarter, which is equal to 45% of expected fiscal 2015 (ended March) earnings of $21.81.

Regards,

David S. Peltier

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