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Strong Dividend Raises Ahead: Five Stocks to Watch
Expect potential dividend increases ranging from 20% and beyond from these five companies.
One might even double its dividend—after all, it did so just last year!
How can I be so confident?
Impressive dividend growth often sparks significant stock price boosts. I refer to this phenomenon as the “dividend magnet.”
The concept is simple: When a company increases its profits and shares a large portion with shareholders, it signals quality to outside investors, creating interest in the stock and driving prices upward.
Broadcom (AVGO): A Prime Example of the Dividend Magnet
The chip giant has demonstrated this with its stock performance. After merging with Avago in 2016, Broadcom’s dividend yield often hovered below 4%, at times falling as low as 1%. Those looking for immediate high yields might have overlooked AVGO. However, investors aware of its dividend growth potential have reaped substantial rewards:
Why Does AVGO Always Have a Small Yield? Shares Climb Too Fast!
Those who purchased AVGO shares after the merger and held onto them have seen their yields soar to an impressive 18% today. If the base dividend appears uninspiring, the potential for a substantial increase could lead to further stock price growth.
In the spirit of this “dividend magnet,” let’s explore five companies expected to announce dividend hikes soon. These shareholder-friendly firms have been known to raise dividends between 20% to 178%. If history is any guide, we should be prepared for what’s to come.
ADT Inc. (ADT)
Dividend Yield: 3.1%
2024 Increase: 57%
Projected Q1 Dividend Announcement: Late January to February
Significant hikes after stagnant periods can be exciting. Such increases often indicate a substantial shift, either through organic growth or strategic acquisitions. ADT Inc. is a case in point; this home security provider plans to raise its dividend by 57% in early 2024. This would mark its first increase since it started paying dividends shortly after its IPO in January 2018.
Originally spun off by Apollo with nearly $10 billion in debt, ADT has recently made strides to improve its financial position. The sale of its commercial business helped reduce debt to $7.7 billion, still above its $6.2 billion market capitalization. Notably, the planned dividend hike isn’t a one-time special dividend but a regular increase.
What ADT does next will be critical. With a low payout ratio of 30% and two years of positive earnings, the company anticipates a 43% boost in adjusted profits for 2024 following the closure of its less successful solar division. However, its large debt may still restrict aggressive dividend growth.
The upcoming period to watch is late January, similar to last year’s announcement. Historically, ADT tends to announce dividends in late February or early March, aligning with its Q4 earnings report.
ADT Has Sounded the Dividend Growth Alarm
Scorpio Tankers (STNG)
Dividend Yield: 3.0%
2024 Increase(s): 100%
Projected Q1 Dividend Announcement: Mid-February
Scorpio Tankers specializes in transporting crude oil and refined petroleum products with a fleet of 102 vessels. However, the shipping industry’s erratic nature often leads to fluctuating stock prices and profits. Despite facing net losses in half of the past decade, STNG has still managed to generate about $900 million in profits.
This volatility has resulted in inconsistent dividend distributions, making STNG’s more stable approach stand out. The company has raised its dividend significantly over the past two years: starting at 10 cents in February 2022, rising to 20 cents in 2023, and now projected at 40 cents in 2024—essentially doubling twice in a row.
The upcoming February announcement is particularly noteworthy, as it may reveal whether Scorpio is on a robust growth trajectory. The firm currently maintains a low payout ratio, less than 15% of expected earnings for the year.
That said, history cautions potential investors. The company previously cut its dividend by 92% in 2017 during a downturn, and following a 1-for-10 reverse split in 2019, the current dividend is now only one-third of its past value.
Meritage Homes (MTH)
Dividend Yield: 2.0%
2024 Increase(s): 178%
Projected Q1 Dividend Announcement: Mid-February
Meritage Homes is a mid-sized homebuilder focused on serving first-time and move-up buyers primarily in the southern U.S. They also offer mortgage and finance products. Following a notable profit increase in 2022, Meritage Homes has positioned itself for potential dividend growth in 2024.
Stay tuned as these companies may soon reward shareholders with impressive dividend hikes.
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The Landscape of Dividend Growth: Key Players to Watch
As interest rates potentially stabilize, the housing market could see a resurgence. Bank of America (BofA) projects that a decrease of 25 basis points in mortgage rates—provided they remain below 7%—could welcome over a million households back into the market.
Meritage Homes (MTH) Sees Dividend Growth
Although Meritage Homes (MTH) experienced a profit decline in 2023, the company showcased resilience through an increase in its dividend. Early in 2024, Meritage announced a remarkable 178% dividend hike to 75 cents per share quarterly. Following a stock split at the start of 2025, that amount adjusted to 37.5 cents per share. This move was crucial after several years of stock growth.
The upcoming mid-February dividend announcement is crucial for investors. Analysts predict modest profit growth in the mid-single digits for MTH. Currently, dividends account for less than 15% of profits. A conservative increase, or no change at all, might indicate concerns about the market’s future. Despite earlier Fed rate cuts, 30-year mortgage rates have escalated back to almost 7%. Consequently, MTH’s stock value has dropped 30% since its peak in September 2024.
Atlas Energy Solutions (AESI): Pioneering Dividend Potential
Dividend Yield: 4.3%
2024 Increase: 20% (across 4 hikes)
Projected Q1 Dividend Announcement: Early February
Atlas Energy Solutions (AESI), which debuted on the stock market in March 2023, has been making strides in the energy sector by providing essential services to oil and natural gas companies. Notably, AESI supplies mesh frac sand, a critical component in hydraulic fracturing.
Since its IPO, Atlas has struck a positive note by issuing dividends in a generally upward trajectory, though the specifics reveal complexities:
- Q1 2023: 15 cents (fixed)
- Q2 2023: 20 cents (fixed: 15 cents, variable: 5 cents)
- Q3 2023: 20 cents (fixed: 15 cents, variable: 5 cents)
- Q4 2023: 21 cents (fixed: 16 cents, variable: 5 cents)
- Q1 2024: 22 cents (fixed: 16 cents, variable: 6 cents)
- Q2 2024: 23 cents (transitioning to entirely fixed dividend)
- Q3 2024: 24 cents (with a $200 million share buyback announcement)
The expected dividend announcement in early February could shed light on AESI’s plans for consistent quarterly increases. A concern arises as profits are projected to drop 33% to $1.03 per share for 2024, raising questions about its dividend sustainability. However, strong growth is expected in the following year, possibly allowing for improved coverage ratios.
Penske Automotive Group (PAG): A Proven Track Record
Dividend Yield: 3.1%
2024 Increase: 51%
Projected Q1 Dividend Announcement: Mid-January
Penske Automotive Group (PAG) operates a vast network of dealerships worldwide, including locations in the U.S., U.K., Germany, Italy, Canada, and Japan. The company also excels in commercial truck retail and services across North America, boasting a significant stake in Penske Transportation Solutions.
Penske has an impressive record of quarterly dividend increases over the past decade, with an exception during two quarters in 2020. The dividend saw a steep rise, finishing 2024 at $1.19 per share, nearly double the 63 cents that started off in 2023. This growth persists even amidst a projected 16% decline in profits for the year.
Preparing for 2025: Focused on “Dividend Magnets”
This year, my attention is directed at stocks with strong dividend growth—dubbed “Dividend Magnets.” These stocks, with some of Wall Street’s fastest-growing payouts, attract investors and have the potential for significant total returns.
I’m narrowing down five stocks that I believe represent the future of high dividend growth returns. One even belongs to the Dow Jones Industrial Average!
For more insights on these five potent “Dividend Magnet” potentials and a free Special Report detailing their names and tickers, click here.
Also see:
- Warren Buffett Dividend Stocks
- Dividend Growth Stocks: 25 Aristocrats
- Future Dividend Aristocrats: Close Contenders
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.