The pending Acme Packet (APKT) acquisition will eat up around $1.7 billion in net cash, it still leaves management without a viable solution for the rest of the balance sheet, and a dividend boost makes a lot of sense. The decision to accelerate dividend payouts ahead of the fiscal cliff in 2012 already shows that dividend are front of mind for the firm. Investors should keep a close eye on shares in 2013 -- with their wallets open.
2013 is shaping up to be a stellar year for food and beverage giant PepsiCo (PEP). The $117 billion firm has seen its share price climb by 11% since the first trading day in January, besting the broad market's also-impressive climb by a big margin. But investors shouldn't forget that this dividend stock is paying out a 2.83% yield on top of any capital gains they earn this year.
PepsiCo is one of the biggest snack and drink manufacturers in the world, with popular names like Frito Lay, Quaker and Gatorade under the Pepsi umbrella. Despite its beverage-centric name, the firm earns around half of its revenues through its food units, diversification that spreads some of the risk around from its duopoly with Coca-Cola (KO). For snack and beverage firms, distribution is key. Pepsi's distribution network is one of the biggest and most efficient in the world, a fact that makes it incredibly cheap for PEP to incrementally add new brands to customers' store shelves.Pepsi has scale, but it's working on earnings growth from two angles: by boosting its sales in emerging market countries and by shaving costs off of its income statement. Both approaches should bear fruit for investors in 2013. That should translate into bigger dividend checks this year too. Colgate-Palmolive Colgate-Palmolive (CL) is another potential dividend hiker in the next quarter; right now, CL pays out a 62-cent dividend for a 2% yield. The consumer goods giant owns some of the biggest household product brands in the business, from namesake Colgate and Palmolive to Softsoap, Speed Stick, and Hill's Science Diet pet food. Those valuable consumer staple brands provide some semblance of sticky customers and pricing power for CL, income statement protection that second-tier brands can't offer their owners.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV