Recent Dividend Increases

There have been some great dividend increase announcements recently from some high profile and not so high profile dividend companies. Of course, as dividend growth investors we not only seek current yield but also seek dividend increases year after year.

 

Let’s start out with the very popular dividend stock Target Corp. (TGT). TGT recently announced a huge dividend increase of 20.9%. A monster increase by any standard. This continues to make TGT a very coveted dividend aristocrat having raised its dividend every year for the past 47 years. Currently yielding a generous 3.00% with a low payout ratio of 46.5% ensures TGT’s dividend is safe and still has room to grow. While on a valuation basis TGT is a bit high at 19.2. It seems that current shareholders and new buyers helped increase its PE by buying up new shares.

 

Next up is Best Buy Co., Inc. (BBY) which also just announced a healthy 11% increase of its dividend. Currently yielding 2.40% with a low payout ratio of just 33.0% BBY has room to continue to pay shareholders a continuing dividend. Though not a traditional long term dividend grower BBY does currently offer a very low PE relative to its peers and S&P at only 9.6. Does this mean the stock is cheap or are there other fundamentals that are causing its low valuation? I tend to think the latter, however, you cannot discount the meaning behind this most recent generous dividend raise.

 

Another recent dividend increase comes from UnitedHealth Group Incorporated (UNH). UNH operates as a diversified health and well-being company offering health benefit plans and services for large national employers, public sector employers, small businesses, and individuals. UNH announced an incredible 35.7% increase in its dividend payment. While its current yield is relatively low at 1.40% there is no discounting this huge dividend increase going forward. UNH has been raising its dividend for the last four years and currently has a low payout ratio of 27.2% which pretty much secures the dividend. UNH may also offer up some value in this high valuation market with a PE of only 14.6.

 

And now the mother of all dividend increases comes from oil services company National Oilwell Varco, Inc. (NOV) that recently raised its dividend an eye popping 76.9%. Currently yielding 2.40% NOV has been raising dividends for over five years and can continue to do so with its low payout ratio of 30.3%. NOV is another relative bargain in the market today trading at a PE of just 13.9.

 

From a large dividend increase to a small increase Bank of Montreal (BMO) just announced a 2.63% increase in its dividend distribution. While the increase may be small BMO currently yields a healthy 4.10% which is sure to get any dividend investor excited. BMO currently has a moderate yet safe payout ratio of 52.3% and a very low PE of just 11.5. BMO may provide an attractive buying opportunity in this high valuation market as well.

 

Finally, rounding out our mention of some of the most recent dividend increases we have Avago Technologies Limited (AVGO). AVGO is a semiconductor based in Singapore that manufactures RF power amplifiers, RF filters, ambient light sensors, low noise amplifiers, proximity sensors, diodes, fiber optic transceivers among many other semiconductor peripherals. AVGO announced a healthy increase of 7.41% of its dividend which currently yields a low 1.60% with an equally low payout ratio of just 35.3% which translates to a safe dividend. On a PE basis AVGO is the most expensive stock mentioned today at 32.4. Better wait to pull the trigger on this one.

 

Are any of the companies mentioned in your portfolio? Let me know.

 

Disclosure: Long none

12 thoughts on “Recent Dividend Increases

  1. As a TGT shareholder, I am happy with the increase. I purchased TGT last month with the recent selloff to the stock. I think the fundamentals of the company is still strong and the negative sentiment is just short term. I might buy some more if the price stays in these low levels.

    • Hi DGJ,

      You seem to have bought TGT at a great time. I know from all the blogs out there that TGT is a favorite among dividend investors. I still haven’t been convinced for the long term about it though TGT may do well for the next several years. Thanks for commenting!

      • Hi Divhut,

        TGT exists since a very very long time… But before they decided to open stores in Canada, this chain was unknown to me. I went there two or three times but I didn’t have a good experience. Aisles were empty. The parking lot was empty. Clerks were…. Well were there clerks working there?

        I don’t like that store and I don’t know any friends, colleagues or relatives who like it… Their Canada move has not been a success for sure.

        Canadians need to see value to go somewhere but.. They sell the things Wal Mart sells at a premium… So what’s the point for a customer to go there unless the Wal Mart store would be too far away.

        Plus, most of their stores were opened in existing buildings previously occupied by Zellers stores.. Maybe people here associate the chain with bad souvenirs they had from Zellers… We are used not to go there anymore since this chain was dying for several years already.

        They have had to face a lot of headwind recently and even though they increased the dividend by 20% I still feel unsafe about their future prospects. I don’t see how they differentiate from Wal Mart except by their higher prices and with the tough Costco and Amazon’s competition I feel Target might be another Zellers or Sears… Once great but now living on artificial breathing system…

        I’ll prefer buying Wal Mart’s share on one of the next dips…

        How is that chain perceived in the US? Is it hard to find a parking spot in their parking lot?

        • Hi Allan,

          To answer your question about TGT’s perception in the U.S. I would have to say they have suffered a black eye. There is no question that their reputation has been damaged with the recent credit card snafu they experienced. A lot of shoppers view TGT with a questionable eye these days but as you know people have short memories and in time the damage will appear to have lessened. That being said, a lot of the dividend investors on the blogs have been buying up TGT on the dips as a result of its recent troubles. I do have to agree with you about the future of the retailer. Personally I do not own TGT nor any large retail outlet. I feel that large retail spaces will be in decline for the foreseeable future and never come back as shopping moves online. BestBuy, RadioShack, Macy’s, Circuit City, GoodGuys, are closing stores or gone altogether. We will have a need a for physical retail spaces, just less.

          Thanks for commenting.

  2. Out of all of these I only own Target, but boy was I surprised by their increase. Given the recent struggles I was expecting a fairly conservative increase but it sure is encouraging that they think they can afford a 20% increase. I might have to add to my position in TGT because they’re now offering a great yield. It makes up a big too much of my portfolio right now but it’s still tempting.

    • Hi PIP,

      Yeah, the TGT raise caught everyone by surprise. Of course, it was a pleasant surprise. I wanted to feature some of the lesser known dividend growth stocks too. I know TGT is pretty widely held and more known than the others in the article.

  3. I am very very happy with the TGT dividend increase as well as their proactivity in handing the current headwinds.

    I am probably going to continue to add slowy to my position though, no need to get too crazy =)

    Take care!

    • Hi ILG,

      Good to hear you are happy with TGT as many of the dividend bloggers are. Nibble into any position. That’s how I built up my entire portfolio slowly. Thanks for stopping by.

  4. DivHut,

    Pumped you talked about Target. If you want – check out my stock analysis I posted on our blog about them, you may like it and it may assist in your research. That 21% was a monster increase though, dividend increases are the most exciting thing to me as a div investor. Keep at it!

    -Lanny

    • Hi DD,

      Well I couldn’t ignore that huge dividend increase for TGT. I know a lot of the dividend investors out there were very happy about this recent increase. Despite all the good mojo for TGT recently I am still not a shareholder nor looking to add TGT anytime soon. I’ll take a look at your analysis. It may change my mind. Thanks for stopping by.

  5. DivHut – thanks for sharing the list. I own only TGT but definitely happy to see the 21% increase. I agree with your sentiment that Target has a lot of things to work on to improve their situation in Canada. Hopefully they are listening to the feedback from you Canadians and change up their business model their to meet most of your desires or they will continue to lose customers there.

    As for TGT in North America, I think they will do fine. I don’t think they will ever overtake WMT as the #1, but I feel TGT has a strong hold on the #2 spot. Personally, I find this competition similar to Coke and Pepsi. They will continue to compete, but WMT will always be #1. But that doesn’t mean the #1 is the better value. As with the K and PEP saga, there will be times when the #2 is the better value. Right now, I think TGT is the better value. Just my opinion. 🙂

    Best Wishes. AFFJ

    • Hi AFFJ,

      Well TGT certainly has a lot of mojo these days among the blog posts I read and interest people seem to have in the stock. A lot of people believe that TGT is a fine company just going through a rough patch now. I’m not sure how TGT will turn around its miserable Canada roll out. Perhaps in time they will get things right there or completely leave and focus more on their USA stores. Time will tell. Thanks for your comment.

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