Double-digit dividend growers are among our most-important themes for 2019, and stretches across industries, explains John Eade, an analyst with Argus Research, a leading independent Wall Street research firm.
We think companies that raise their dividends consistently at a double-digit rate are sending off three important signals amid all the recent market volatility:
1) the company’s balance sheet is strong enough to pay a dividend; 2) management is clearly focused on providing shareholder returns; and 3) management is confident enough in the near-term outlook to aggressively raise the payout.
This third factor is especially important as the economy cools off into 2020 and earnings growth slows. Here are 10 stocks that meet our double-digit dividend test and are on the Argus BUY List.
They are also core holdings in our Dividend Growth Separately Managed Account and in the Dividend Growers Total Return Trust, sponsored by SmartTrust.
* Amgen Inc. (AMGN): This Biotech recently boosted its dividend 10%. The current yield is 3.0%.
* Danaher Corp. (DHR): This Healthcare company’s yield may be low (at 0.6%) but management’s five-year track record of dividend growth is 45% and average annual returns over the past five years have been 19%.
* Harris Corp. (HRS): This defense company is a new addition to the Argus Universe of Coverage. Harris has increased its dividend for 17 consecutive years.
* Home Depot Inc. (HD): HD recently boosted its payout 32%. The current yield on this blue-chip home improvement retailer is 2.7%.
* Lockheed Martin Corp. (LMT): Management of this large-cap Aerospace & Defense company recently signaled clear skies ahead by boosting the dividend 10%. The stock now yields 2.9%.
* NextEra Energy Inc. (NEE): Most Utilities pay dividends, but few, other than NextEra, raise them at a double-digit rate. The current yield is 2.5%.
* Microsoft Corp. (MSFT): More and more technology companies are paying dividends. Software giant Microsoft has grown its dividend each year for the past 15 years.
* Oneok Inc. (OKE): This Energy company has the highest yield of the stocks in the portfolio (at 4.9%) and has raised the dividend for 16 consecutive years. Management projects annual dividend increases of 9%-11% through 2021.
* Texas Instruments Inc. (TXN): Like Microsoft, this semiconductor company also boasts 15 years of dividend growth, including a 4% hike last fall.
* TJX Companies Inc. (TJX): This is a recent upgrade to BUY by Argus Senior Retail Analyst Chris Graja, CFA. TJX has increased its dividend for 22 consecutive years.
