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
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!