Many investors take dividends seriously, and for good reason. Dividends have historically accounted for a huge percentage of the stock market’s total returns over the past several decades. Income investors closely follow their company’s dividend announcements.
It’s not difficult to understand why. While earnings can be managed from one quarter to the next, there’s no faking dividend payments. A company can’t keep up a dividend for long without the supporting fundamentals. Furthermore, companies that increase their dividends are signaling optimism about their futures.
That’s why it’s so important to monitor fluctuations in a company’s shareholder payout. To that end, these stocks are ripe for dividend increases in the very near future. Savvy investors should consider scooping up shares of these great stocks before their dividend increases make the news.
Fatter payouts on the horizon?
There’s perhaps no more famous dividend stock than Altria Group Inc (NYSE:MO), the purveyor of Marlboro cigarettes, among other brands.
According to noted economist Jeremy Siegel, Altria, formerly Philip Morris, was the top performing stock from 1925 to 2003.
Altria Group Inc (NYSE:MO)’s hefty payout is a major reason for its fantastic performance. In fact, Altria has increased its dividend 46 times in the last 43 years, and investors are about to receive another pay raise. That’s because Altria Group Inc (NYSE:MO)’s traditional dividend bumps come in September, meaning the company is due for a dividend raise in short order.
Altria management has pegged its dividend at 80% of adjusted earnings going forward. For the full year, Altria Group Inc (NYSE:MO) expects adjusted diluted EPS to fall between $2.36 per share to $2.41 per share, representing 7% to 9% growth versus 2012.
That means that, assuming Altria Group Inc (NYSE:MO) hits at least $2.36 in per-share adjusted EPS, 80% of that would represent a dividend of roughly $1.88 per share. As a result, investors can reasonably expect a 7% dividend increase in the fall.
Another stock certain to pay its investors more in a matter of weeks is aerospace and defense giant United Technologies Corporation (NYSE:UTX). The Dow Jones Industrial Average component has seen success across its business segments, including Pratt & Whitney and Otis, which makes me particularly optimistic about the magnitude of the company’s imminent dividend increase.
Consider that United Technologies Corporation (NYSE:UTX) generated $16 billion in sales in the second quarter, which represented 16% growth year over year. Earnings per share rose 5% versus the same period last year. Along with the results, management upped its earnings expectations for the full year. United Technologies Corporation (NYSE:UTX) now expects at least $6.00 in per-share profits this year.