Will Boa Raise Dividends Again in 2018
2021 has turned out to be a banner yr for dividend growth investors, marked by unusually large dividend increases.
Dividends began rising steeply during this yr'southward June quarter when many companies that had suspended dividends during the pandemic resumed payments. There were even more firms that reduced payments during 2022 or left their dividend unchanged only signaled their improving business prospects in 2022 by issuing dividend increases.
The result was a median increase in the S&P 500 dividend during the June quarter to 8.three%, up from 7.vii% in the March quarter and iv.viii% in the December quarter. And during the September quarter, the median dividend increase for Due south&P 500 stocks was 9.seven%, up from 8.3% ane year earlier and four.2% two years ago.
"Dividends are back as record earnings, sales and margins take permitted companies to return to the business of returning shareholder wealth," says Howard Silverblatt, Senior Alphabetize Analyst at S&P Dow Jones Indices. December-quarter dividends are expected to exceed the new record set in September, he adds, and information points to a new annual record for dividend growth during 2021.
Increases in S&P 500 dividends accept been impressive this year. Nonetheless, they pale in comparison to the deportment past a handful of extraordinary companies in 2022 that doubled, tripled and in some cases quadrupled their dividends.
Today, we're looking at fourteen stocks that take recently announced much-larger-than-usual dividend increases. Each raised its dividend at least once in 2021, with increases of at to the lowest degree 100%. Most are classic dividend growers, too, with solid balance sheets, formidable cash flow and meager payout ratios paving the way for more dividend growth going forward.
Data is as of Nov. 25. Dividend yields are calculated past annualizing the about recent payout and dividing by the share price.
GeoPark
- Marketplace value: $755.6 one thousand thousand
- Dividend yield: i.three%
- Dividend hike: 100%
GeoPark (GPRK, $12.44) is an oil and gas firm that has benefited from this year's rebound in energy prices. This visitor develops oil and gas reserves in Chile, Columbia, Brazil, Argentina, Peru and Ecuador. GeoPark holds economic interests in 31 drilling blocks, as well as offshore concessions in Brazil that contain 124 million barrels of net proved reserves.
Despite output declines caused past a shutdown at its Platanillo field where production has since been restored, GeoPark is generating significantly improved profits and EBITDA (earnings before interest, taxes, depreciation and amortization) in 2021. During the outset nine months of the year, the company'southward revenues rose 69% year-over-yr to $486.2 meg and adjusted EBITDA improved 32% to $213.vii million, or roughly 44% of sales.
GPRK has an aggressive 2022 drilling plan that aims for 40-48 wells and opening up fifteen-20 targets in new fields. Thanks to rising complimentary cash flows – the greenbacks leftover later on capital expenditures, dividend payments and financial obligations have been met – the visitor anticipates cocky-funding its $30.6 1000000 the drilling program. GeoPark told investors that every $1 spent on drilling in 2022 is expected to add $ii.80 to adjusted EBITDA.
GeoPark has $77 million of greenbacks and leverage of only 2.2 times adapted EBITDA. The company used its greenbacks in Baronial to double its quarterly dividend, and in November, it commenced a six million share repurchase program. Even with the higher dividend, payout from cash flow is less than 5%, making the new dividend very safe.
Equally far equally Wall Street analysts go, 4 say GPRK is a Strong Buy, two telephone call it a Buy and two believe it'south a Hold, according to S&P Global Market Intelligence. The $21 consensus price target for GPRK stocks is 68.5% higher than the current share price.
Lear
- Marketplace value: $10.vii billion
- Dividend yield: 1.ane%
- Dividend hike: 100%
Lear (LEA, $179.22) articles seating systems and electronic distribution and connection systems for automobiles, every bit well equally embedded vehicle control software. The visitor sells to original equipment manufacturers (OEMs) worldwide and operates 257 manufacturing facilities across 38 countries.
Although component shortages in 2022 take hurt OEMs and afflicted Lear's sales, both of the company's businesses grew faster than the market and Lear is positioning for a 2022 rebound fueled by acquisitions and pregnant new joint ventures.
During the September quarter, Lear caused a business organization from Kongsberg Automotive that is a market leader in luxury seating and is expected to contribute $300 million of revenues this fiscal twelvemonth. In addition, Lear signed articulation ventures with a manufacturer of automotive connector devices and a architect of on-board chargers for electric vehicles (EVs). Lear too launched products with General Motors (GM), Land Rover, Mercedes, Volvo and Jaguar.
The visitor signaled its expectation of a 2022 rebound by doubling its dividend and using some of its $1.1 billion of residual-canvass cash for share repurchases. Lear'south low 13.7% payout makes frequent dividend increases manageable.
Wall Street analysts accept six Strong Purchase, four Purchase, 8 Agree and two Sell ratings on LEA. Evercore ISI is one of those that are bullish on the stock and recently upgraded LEA to Outperform (Buy). The research firm sees more than thirty% upside for the shares over the next year.
Marathon Oil
- Market place value: $13.1 billion
- Dividend yield: 1.six%
- Dividend hike: 100%
Marathon Oil (MRO, $sixteen.83) is an independent free energy visitor focused on product from iv major U.Due south. oil plays – Eagle Ford in Texas, the Bakken formation in North Dakota, the Stack and Scoop backdrop in Oklahoma and the Permian Bowl in New Mexico. Production is a 50-50 mix of natural gas and natural gas liquids (NGL) and averaged 284,000 barrels per day terminal quarter, with sales of 281,000 barrels per twenty-four hours.
MRO is reaping the benefits of natural gas and NGL prices that have roughly doubled in 2022 and the fact that the company has few most-term hedges in place limiting its upside from rising prices.
Marathon'southward complimentary cash flow soared to $1.iii billion in the first ix months of 2021, which, combined with existing cash, enabled $i.4 billion of debt repayment, $200 million of share repurchases, and dividend increases 3 quarters in a row for a cumulative 100% dividend hike since the end of 2020.
The company plans to return fifty% of December quarter cash menses to investors via share repurchases and dividends and recently authorized a new $2.5 billion share repurchase program. With $3.vi billion of liquidity and improving gratuitous greenbacks flow, Wall Street analysts think the company could purchase itself back within five years.
MRO is a top energy choice of Truist Securities analyst Neal Dingmann, who has a Buy rating on the stock. This outlook is shared by several Wall Street pros. Of the 31 covering Marathon Oil tracked by Due south&P Global Market Intelligence, 14 say it'south a Strong Buy, six telephone call it a Buy, 10 believe it'south a Hold and merely one deems information technology a Sell.
Morgan Stanley
- Market place value: $181.45 billion
- Dividend yield: 2.eight%
- Dividend hike: 100%
Morgan Stanley (MS, $101.12) is a leading global fiscal services house with operations across 41 countries. The company provides investment cyberbanking, stock and bond trading, wealth management and institutional investment direction services.
Final yr, Morgan Stanley closed ii major acquisitions – E*Trade and Eaton Vance – which helped support growth of $400 billion of cyberspace new client assets and increased total client avails under management to a staggering $6.two trillion.
East*Merchandise gives MS 5.2 million new client accounts, a major presence in online brokerage and a more durable, diversified acquirement stream. In addition, E*Merchandise's strong deposit base averaging effectually $56 billion per yr provides a source of funding for Morgan Stanley'south loans to wealthy clients, an expanse where the company has struggled. The financial business firm also expects to realize $400 meg of operating synergies from the deal.
The touch of these acquisitions is apparent in 2022 results. Morgan Stanley'southward revenues grew 28% during the offset 9 months of this year and adjusted earnings per share (EPS) rose thirty%. September quarter results showed revenues 24% college from the year prior and nineteen% EPS gains.
Morgan Stanley signaled its positive outlook with a 100% dividend hike during 2021. A conservative 26% payout has helped the visitor deliver eight consecutive years of dividend increases and 24 years in a row of paying dividends.
Wall Street analysts look for Morgan Stanley to outperform banking peers in 2022 and deliver exceptional dividend growth. The consensus rating among the 8 analysts following the stock existence tracked by South&P Global Market Intelligence is Buy.
Suncor Free energy
- Market value: $38.8 billion
- Dividend yield: five.i%
- Dividend hike: 109%
Canadian oil driller Suncor Energy (SU, $26.64) develops reserves in Canada'south Athabasca oil sands formation, which is 1 of the world's largest petroleum resource basins. The company's oil sands operations recover a substance called bitumen that is either upgraded on-site or sent to market equally a refinery feedstock, diesel fuel or other byproduct. Oil sands make up 7.4 billion of Suncor'southward vii.8 billion barrels of reserves.
In addition to oil production, Suncor owns iv refineries with a combined refined product capacity of 460,000 barrels per day, Canada's largest ethanol plant and i,800 Petro-Canada gas stations beyond the Great White Northward.
Ascent oil prices created a tailwind for the company in 2021. Suncor hits breakeven at oil prices of approximately $35 a butt, and West Texas Intermediate (WTI) oil prices are currently effectually $80 per barrel. SU likewise has initiatives underway that volition further lower breakeven costs by another $iv.50 per barrel by 2023 and $8.00 per barrel by 2025.
Suncor used its greatly increased 2022 free greenbacks period to double its dividend, make the largest share buyback in its history, cutting $3 billion from debt and invest $2.6 billion-$3.ane billion in its operations. Going forrard, Suncor is targeting 25% annual dividend increases over the next five years.
This would add to Suncor's 29-year history of paying dividends and with a cash flow payout ratio of 15%, there's plenty of room for dividend growth.
As far as analyst ratings become, in that location are vi Strong Buys, 10 Buys and half-dozen Holds on SU. Analysts like the company'southward low breakeven, loftier margin of safety, delivery to a rising dividend and modest valuation.
SU shares look inexpensive, also, trading at eleven.3 times forward earnings – a 35.8% discount to the company's five-twelvemonth average forward price-to-earnings (P/E) ratio.
United Microsystem electronics
- Marketplace value: $28.3 billion
- Dividend yield: 2.5%
- Dividend hike: 110%
United Microelectronics (UMC, $xi.41) operates 12 semiconductor wafer foundries across Taiwan, Singapore, China, Hong Kong, Europe and the U.S. The company is 1 of the world'due south largest chipmakers, counting amidst its customers telecom giants such as Broadcom (AVGO), MediaTek, Texas Instruments (TXN) and Qualcomm (QCOM).
Chip shortages coming out of the pandemic recovery, fueled by newer chip applications in 5G and automobile, have semiconductor prices surging in 2022 and industry players like UMC working at 100% capacity. Wafer shipments have risen five quarters in a row.
UMC'due south revenues rose 25% year-over-year in the September quarter, and EPS rose 91%. The company is guiding for wafer shipments and average selling prices to each rise 1%-ii% during the Dec quarter, with 100% capacity utilization expected.
Engineering science market enquiry house IDC sees the semiconductor market reaching $600 billion by 2025, which equates to an annual growth rate of 5.three%. Increased revenues will come up from new fleck applications in 5G, smartphones, game consoles and automotive.
UMC signaled its confidence by raising its dividend 110% in July. The company boasts an 11-year rails record of paying dividends and 26% annual dividend increases over the past 5 years. Payout has remained conservative at 37% of total earnings.
UMC shares are well-liked past Wall Street analysts. Of the four following the stock tracked past South&P Global Market Intelligence, 2 have a Strong Buy rating, one says Buy and one calls it a Hold.
Alico
- Market value: $265.iii million
- Dividend yield: five.6%
- Dividend hike: 178%
Alico (ALCO, $35.25) is an American agribusiness that owns 84,000 acres of citrus groves and other farmland. The visitor is one of the largest citrus growers in Due north America, holds a roughly 12% share of the Florida citrus market and has Tropicana as its largest customer. Alico was named Tropicana'southward height grower four years in a row.
Citrus prices accept increased significantly in 2022 as a consequence of a tightened citrus supply and ascent fresh orange juice consumption. The visitor is well-positioned to capitalize on strong pricing trends due to one.5 one thousand thousand new citrus copse planted since 2022 from which Alico can begin harvesting fruit in 2022.
The company estimates production at 6.4 million boxes of citrus this year. Harvesting fruit from the newer trees could boost annual production by 56% next year to 10.0 meg boxes.
In addition to citrus groves, Alico owns 35,000 acres of grazing state for cattle and 90,000 acres of oil, gas and mineral rights in Florida. The value of Alico's state holdings, less the company's debt, is estimated at $415 million-$548 million, nearly twice the visitor's market value.
Alico'due south adjusted EBITDA grew 42% in the showtime nine months of 2022 and adjusted EPS jumped to $4.77 from 86 cents the year prior.
This company has rewarded investors with multiple dividend increases since 2019, including a 178% dividend bump in 2021. Dividend payout over the by 12 months was a relatively modest 19%.
ALCO is covered past just one Wall Street annotator, just they maintain a Buy rating on the stock. Meanwhile, their price target of $44 represents implied upside of 22% to current levels.
Methanex
- Market value: $3.3 billion
- Dividend yield: 1.1%
- Dividend hike: 233%
Methanex (MEOH, $43.87) is the globe'south largest producer of methanol, a clean-called-for chemical that is used to produce foams, resins, plastics, paints and medical products. Methanol is besides used as an alternative energy fuel to power vehicles and rut homes. The company supplies methanol to a worldwide client base and maintains a global network of terminals, storage facilities and the industry'due south largest tanker fleet.
Methanol need rebounded in 2022 every bit a result of higher industrial production. MEOH is also benefiting from renewed involvement in methanol as a marine and vehicle fuel. Methanol is being blended into gasoline and used in existing vehicles. Taxis in Communist china are already running on methanol-blended fuel and several other countries are assessing or in the commercial stage of calculation methanol to vehicle fuels.
The company's methanol sales volume grew vi.5% and prices rose 60% in the start ix months of 2021. Methanex's revenues improved 72%, adjusted EBITDA grew 266% and adapted EPS swung to $3.60 from a $ane.77 per-share loss a year agone.
To capitalize on methanol need predicted to rise by 20% or 16 one thousand thousand tons, over the next 5 years, Methanex is building a new ane.8 million-ton methanol found in Louisiana expected to brainstorm operations in late 2023.
Concurrent with the declaration of this construction project in July, Methanex raised its dividend 233% to an annualized rate of 50 cents per share.
The company has paid shareholders 18 years in a row and issued dividend increases every yr betwixt 2022 and 2019. Payments were reduced sharply at the onset of the pandemic and the new 2022 dividend amount is roughly 1-third of what it was in 2019. With payout at only 6%, Methanex has plenty of flexibility when it comes to dividend growth.
Wall Street analysts predict gratuitous cash flow will surge in 2022 and the dividend rate will climb quickly again in one case Methanex hits its goal of having $ane.1 billion of cash on the residuum sail. The visitor ended the September quarter holding $932 meg of cash.
SLM
- Market place value: $v.iv billion
- Dividend yield: two.four%
- Dividend hike: 267%
SLM (SLM, $18.l), also known as Sallie Mae, is the largest originator of private pupil loans in the U.S. In addition to lending, the visitor markets eolith accounts, high-yield savings accounts and other banking products to its customers.
A return of students to college campuses in 2021, assisted by federal stimulus funds and directly payments to schools from the Higher Teaching Emergency Relief Fund, created tailwinds for Sallie Mae that fueled ten% twelvemonth-over-year loan origination growth during the September quarter. The company's loan originations have risen steadily since 2022 with the exception of 2020.
Lower-than-expected accuse-offs and runaway loans likewise equally a greatly reduced share count due to repurchases create a potent outlook for futurity EPS.
Sallie Mae rewarded investors with a 267% dividend hike this year. The company's ultra-low 3%-6% payout from adapted earnings creates optimal flexibility for more dividend growth.
SLM stock has half dozen Strong Buy and four Purchase ratings (compared to two Holds and zero Sells) from Wall Street analysts. In add-on, insiders have recently stepped-up share purchases, which is often seen every bit a positive sign. SLM shares are modestly priced, as well, trading at but 6.7 times forward earnings.
Advance Auto Parts
- Market place value: $fourteen.vi billion
- Dividend yield: 1.seven%
- Dividend hike: 300%
Accelerate Auto Parts (AAP, $233.37) supplies replacement automobile parts through a network of more than 4,700 stores across North America. The company mainly sells to automotive repair professionals, which account for roughly 60% of sales. In 2021, AAP launched Carquest – a new store concept that targets the automotive practise-it-yourself (DIY) channel and provides customers with additional operations and merchandising support.
AAP benefits from the aging of the U.S .vehicle armada. The average age of cars and light trucks in the U.S. is a record 12.i years, co-ordinate to inquiry firm IHS Markit. Aged vehicles account for about replacement parts demand since these vehicles are typically by warranty and serviced by contained garages. Demand for replacement parts surged in 2022 due to ascension motorcar prices and scarcity of new vehicles, which acquired owners to repair rather than replace vehicles.
Even before COVID-19, the visitor was posting impressive financial results, with comparable store sales experiencing a 1.9% compound almanac growth charge per unit (CAGR) and adjusted EPS expanding at sixteen.6% CAGR since 2018.
In the first nine months of 2021, sales rose 11.7% year-over-year and adjusted EPS soared 49.v%. Advance Motorcar Parts is targeting lxxx-120 net new store openings and half-dozen%-viii% same-shop sales growth in 2021, which analysts await to drive 39.4% EPS gains.
The company has a 15-yr record of paying dividends and rewarded investors with a 300% dividend hike in 2021. Payout is targeted at around thirty% of hereafter earnings.
Analysts are mostly bullish on AAP stock, with 10 calling it a Strong Buy and two saying Buy, compared to 11 rating it at Concur and one at Sell. Plus, Credit Suisse included AAP among its nine "top of the crop" picks in November and UBS calls AAP one of its high-confidence, strong[ pricing power stocks.
Trinseo
- Market value: $ii.0 billion
- Dividend yield: 2.5%
- Dividend hike: 300%
Trinseo (TSE, $51.81) is a global manufacturer of plastics and latex binders used in automotive, consumer electronics, medical devices, packaging and other terminate-markets. The company generates $3 billion of annual sales and operates 26 manufacturing sites worldwide.
Despite college fabric costs and supply-chain challenges in 2021, Trinseo delivered 87% year-over-year sales gains and 81% adjusted EPS growth during the September quarter. The company is guiding for tape 2022 fiscal results.
Trinseo plans to heave profits by shifting its business concern mix away from article chemicals and toward highly specialized, value-added products. The shift began in late 2022 with the $1.36 billion acquisition of PMMA operations from Arkema (ARKAY). PMMA is a rigid, transparent plastic used in automotive, medical and consumer electronics applications. In connection with the conquering, Trinseo cut its dividend to focus more than resource on reducing acquisition-related debt.
Having successfully reduced leverage to roughly 2 times EBITDA, Triseo recently acquired PMMA manufacturer Aristech, appear the auction of its synthetic rubber business and rewarded shareholders with a 300% dividend hike. The new dividend is 20% below the 2022 charge per unit, which could make another dividend hike probable in early 2022.
In addition, with the consensus analyst estimate for $x.80 in EPS this year, Trinseo could easily afford to hike its $1.28 per share annualized dividend.
Despite the company successfully expanding into college-margin businesses, TSE shares are cheap, trading at just v.5 times frontwards earnings.
Star Bulk Carriers
- Market place value: $2.1 billion
- Dividend yield: 5.two%
- Dividend hike: 317%
With a fleet of 128 vessels and 14.1 million tons of freight capacity, Star Bulk Carriers (SBLK, $twenty.99) is 1 the world'south largest shipping companies, transporting bulk cargo like iron ore, coal, grain and fertilizer for businesses on a global calibration.
Majority shipping rates accept surged to a decade-plus loftier in 2022 as a event of a post-pandemic surge in demand and tight supply worsened by a dearth of new vessels joining the fleet. What originally looked like a short-term shipping charge per unit spike earlier in the twelvemonth now appears structural and long-term, according to aircraft industry insiders.
Potent fleet utilization and rising shipping rates contributed to Star Majority Carriers' stellar September quarter performance, which showed sales rising 108% year-over-year, adapted EBITDA increasing 248% and adjusted EPS surging to $2.twenty from 29 cents per share one year ago. The company utilized its rising cash period to trim adjusted net debt by 35% and involvement expense by roughly $5 million this yr.
Star Bulk Carriers hiked its dividend to $one.25 per share in November – up 317% from the 30 cents per share information technology paid in May.
Stifel analyst Benjamin Nolan has a Buy rating on the shipping stock, saying the visitor's strong Q3 were reflective of a solid dry majority market."With plenty of upside in valuation, as long as dry out bulk rates stay at these salubrious levels, cash flows and dividends should continue to accrue to SBLK shareholders," he adds.
Devon Energy
- Marketplace value: $30.5 billion
- Dividend yield: 1.0%
- Dividend hike: 345%
Devon Energy (DVN, $45.09) is an independent oil and gas producer who owns drilling backdrop in prolific U.S. plays that include Eagle Ford and the Anadarko, Delaware, Powder River and Williston Basins. The visitor's production is a diversified mix of oil, natural gas and natural gas liquids. At Devon's electric current pace of drilling, its existing, undeveloped properties represent ten years of low-take chances evolution inventory.
Production volume rose to 608,000 barrels per day during the September quarter and exceeded guidance past 5%. Devon'southward operating greenbacks flow rose 46% year-over-year to $1.6 billion. Later investing 30% in development activities, the visitor was left with $i.1 billion of free cash flow, up eightfold from last year and the highest quarterly amount in Devon'due south 50-year history.
With breakeven costs of just $30 per barrel, Devon anticipates free greenbacks flow yields ranging from 15%-18%, bold WTI oil prices of $70 per barrel to $fourscore per barrel.
The good news for current investors is that Devon is prioritizing gratis cash catamenia generation and returning greenbacks to shareholders over book growth. During the September quarter, the company raised its stock-still-plus-variable rate dividend by 71%, initiated a $1.0 billion share repurchase program and increased residue sheet cash to $2.three billion.
Devon has a 29-year track record of paying dividends, grew the fixed component of its quarterly dividend 345% this year to 49 cents per share and is guiding for amend than 90% dividend growth in 2022.
DVN stock is well-liked by Wall Street analysts. Of the 33 following the stock tracked by South&P Global Market place Intelligence, 21 say it's a Strong Buy, 7 believe it's a Purchase and just five have it at Hold. Investors like the company's rich resource base, modest valuation and upside surprise potential tied to both dividend hikes and share repurchases.
Genco Shipping & Trading
- Market place value: $617.1 million
- Dividend yield: 2.2%
- Dividend hike: 650%
Genco Shipping & Trading (GNK, $xiv.72) is an ocean freight carrier that transports iron ore, coal, grain and other majority bolt worldwide. The company owns a fleet of 44 vessels of various sizes and configurations with an amass capacity of approximately 4.4 million deadweight tons.
Shipping rates have hit decade-plus highs in 2022 and Genco's president recently told Bloomberg that he expects rates to motility even higher because of clogged supply chains and expanded trade that is straining fleet capacity. According to Genco, every $1,000 increase in daily rental rates for its 44-vessel fleet equates to $xvi million of incremental annualized EBITDA.
The company'due south September quarter EPS was the highest in thirteen years and quarterly EBITDA of $79.8 million exceeded full-year 2022 EBITDA.
Genco took advantage of robust pricing in September by locking in high daily rates for several vessels over multi-year periods. The company also took delivery of four new vessels that volition immediately begin contributing to cash menses.
Genco has used its expanded 2022 cash period to trim one-third from its debt and issue dividend increases three times for a cumulative 2022 increase of 650%. The company began paying quarterly dividends in 2022 and maintains payout at a pocket-sized 13%-xiv% of cash flow.
GNK shares accept half-dozen Potent Purchase ratings, one Purchase and 1 Hold from Wall Street analysts, who wait shipping rates to remain at elevated levels next year, which will assist expand the visitor'southward cash flows and share price.
Source: https://www.kiplinger.com/investing/stocks/dividend-stocks/603842/dividend-increases-14-stocks-that-have-doubled-their-payouts
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