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