That day is not here yet. It will take Apple's management a few more years to realize that the company's current cash balance--in excess of $100 billion--is already more than adequate, and future free cash flow doesn't need to be retained. Look for Apple's dividend to keep rising, perhaps reaching that $30 a share mark by mid-decade. In effect, investors buying this stocks now will be rewarded with handsome annual dividend streams starting in just a few short years.
Despite the profound cost pressures taking place in our nation's health care system, the insurance end of the business remains quite profitable. Case in point: Wellpoint (WLP), one of the nation's top insurers, is expected to keep generating around $4 billion in annual operating cash flow in 2013 and 2014, just as it has in the past. And now that cash flows are likely to remain stable, management may be inclined to loosen up a fairly rigid dividend policy. Despite earning around $8 a share every year, Wellpoint's dividend remains at just $1.15.
Wellpoint's management could afford to triple the dividend -- to around $3.50 a share -- and still retain the bulk of its annual cash flow. That would equate to a dividend yield exceeding 5%, giving this company one of the strongest yields in the S&P 500.To see these potential dividend boosters in action, visit the 4 Companies on the Cusp of a Big Dividend Hike portfolio.
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