QUALCOMM, Inc. (QCOM), HollyFrontier Corp (HFC): 4 Dividend Stocks That Could Double Payouts in 3 Years

Page 1 of 3

Rising profitability and swelling cash flows have enabled an increasing number of companies to boost their dividends substantially. In an environment characterized by low yields and reduced opportunities for business growth, some companies have pursued shareholder value-boosting capital deployment policies, channeling more funds into dividends and share buybacks. Among companies with strong operational performance, there are some that could continue to boost dividends at above-average rates.

A select few

A small group of companies has a potential to double dividends within a relatively short time, including a few that have the preconditions to double them in three years. Below is a closer look at four dividend-paying companies with yields exceeding 2% that have basic preconditions to double dividend payouts within three years; investors searching for a repeatable, market-beating strategy can continue reading here.

QUALCOMM, Inc. (NASDAQ:QCOM)

Qualcomm

QUALCOMM, Inc. (NASDAQ:QCOM), the world’s third largest chipmaker, is one of the companies that could deliver double its current level of payouts within three years. The company’s balance sheet is characterized by absence of long-term debt and cash and short-term investments constituting some 28% of the company’s total assets. (Cash and marketable securities are 64% of total assets.) QUALCOMM, Inc. (NASDAQ:QCOM) boosted its dividend by 40% in March 2013, and cumulatively by 84% since May 2010. Despite such a high recent increase in QUALCOMM, Inc. (NASDAQ:QCOM)’s dividend, the stock is yielding only 2.2%. The company’s payout ratio is low at 31% of the current-year EPS estimate. The chipmaker’s long-term EPS CAGR, at 18.0% for the next five years, could support dividend growth that would double the payout within three years.

QUALCOMM, Inc. (NASDAQ:QCOM) is the major beneficiary of the smartphone and mobile computing revolution, as it has a leading position in application processors with integrated basebands for smartphones. The company’s revenue from mobile chipsets has risen so fast over the past two years that Qualcomm has ascended from the world’s ninth to third largest chipmaker by revenues. This marked the fastest rise in the top ranks of any chipmaker in recent history. In the first quarter, the company’s delivered a 24% increase in revenues, 16% growth in non-GAAP EPS, and 14% increase in MSM shipments.

The growth streak is expected to continue, with double-digit revenue and EPS CAGR targets for the next five years, as smartphone penetration increases and 3G expansion continues in emerging markets. In fact, Gartner forecasts that smartphone unit shipments will grow at a CAGR of 24% between 2011 and 2016, while tablets will see a 41% CAGR over the same period. Wireless Intelligence expects 3G/4G connections growth in emerging markets of a cumulative 255% between 2011 and 2016. This growth will drive a robust demand for QUALCOMM, Inc. (NASDAQ:QCOM)’s chipsets across the three dominant smartphone operating systems. Still, risks of a slowdown exist, especially if emerging market growth in 3G/4G falters and competition gains market share.

HollyFrontier

HollyFrontier Corp (NYSE:HFC), an independent petroleum refiner, has a strong balance sheet with long-term debt-to-equity of 20% and nearly 24% of total assets in cash and short-term investments. The company has been paying both regular quarterly and special dividends since mid 2011. Since announcing the merger in 2011, the company has increased its regular quarterly dividend by 300%. It supplements the regular quarterly payouts with 50-cent special dividends, which the company paid five times in 2012. Its current yield on the regular dividend is 2.4% and its payout ratio is only 19%. While analysts forecast a modest 3.4% EPS CAGR for the next five years, the company is well positioned to continue growing its regular dividend, with a possibility of doubling it within three years.

Page 1 of 3

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!