Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Dow Dividend Report: Expect Nike, Merck, Disney to Raise Payouts This Month

The Dow Jones Industrials (DJINDICES: ^DJI  ) include 30 of the most influential companies in the world, and they share a common trait: all pay dividends. Indeed, distributions are so important to Dow stocks that you can typically count on most of the companies to raise their payouts like clockwork each year. November is traditionally when you can expect to see increases from Nike (NYSE: NKE  ) , Merck (NYSE: MRK  ) , and Disney (NYSE: DIS  ) , but will the three Dow components follow through this year? Let's take a look at their dividend histories and prospects for future payout growth.

Of the three stocks, Merck has by far the biggest yield at 3.8%. Yet it also has the poorest prospects for dividend growth, as it only raised its payout by a single penny per share last year and kept its payout unchanged from 2004 to 2011. Considering that the company paid out more in dividends over the past year than it brought in from earnings, along with the drugmaker's patent-cliff challenges, Merck's stinginess isn't all that surprising. Last year, Merck announced its annual increase on Nov. 27; with the company seemingly trying to re-establish regular dividend growth, investors could see a very modest increase later this month to extend the streak to three years.

Nike is in the opposite position of Merck, having plenty of earnings for use in boosting payouts but having a low yield of just 1.1%. The athletic giant has done a good job of accelerating its dividend growth in recent years, though, with increases of 15%-17% in each of the past three years. With a payout ratio of just 28%, a raise to $0.24 or $0.25 per share each quarter wouldn't tax Nike's cash flow. An announcement somewhere around the Nov. 15 date on which it announced last year's boost could extend Nike's decade-long streak of increases another year.

Disney is unusual among dividend stocks in that it delivers one payout each year. Also carrying a low yield of slightly more than 1%, Disney announced a 25% dividend increase last Nov. 28, following up on a 50% increase the previous year and a 14% jump the year before that. A payout ratio of just 23% would easily justify a dividend jump to $1 per share annually, and the growth potential of its many entertainment franchises should keep those payouts growing well into the future.

Why you should pay attention to dividends
If all this attention to timing of dividend payments seems silly, it shouldn't. It all comes down to one simple fact: Dividend stocks can make you rich. But are these Dow stocks your best bet for top dividends. Our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2717198, ~/Articles/ArticleHandler.aspx, 9/25/2016 10:09:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:55 PM
^DJI $18261.45 Down -131.01 -0.71%
DIS $93.27 Down -0.14 -0.15%
Walt Disney CAPS Rating: *****
MRK $62.96 Down -0.06 -0.10%
Merck and Co. CAPS Rating: ****
NKE $55.15 Down -0.26 -0.47%
Nike CAPS Rating: *****