Dividend investors love to choose stocks that not only have long track records of dividend payments, but that also regularly increase the amount they pay out to their shareholders. In fact, some companies are so reliable in boosting their dividends that they tend to do so around the same time every year. For McDonald's (MCD 1.70%), Microsoft (MSFT -0.66%), and Verizon Communications (VZ 0.03%), failing to raise their dividends between now and Dec. 31 would mark the end of long streaks of dividend increases that date back, in some cases, for decades.
More gold from the golden arches
McDonald's has had a lot going for it lately. Comparable restaurant sales were up more than 5% last year, outpacing not only most of its fast-food rivals but also its own more sluggish results from the past several years. An initiative to refranchise its operations has dramatically boosted profitability, and even though revenue has fallen because of the move, what sales are left bring much higher margins. That gives McDonald's plenty of money to invest in furthering its internal growth, keeping up with changing demands of the industry to institute state-of-the-art technology for services like delivery and mobile ordering. With demand for its McCafe and all-day breakfast menu remaining strong, McDonald's will continue to be a leader in the space for the foreseeable future.
Image source: McDonald's.
For 42 straight years, McDonald's has given investors an annual boost to their dividend payments, and increases recently have generally come in the fall. That makes September a reasonable bet to see an increase similar to the nearly 8% boost it gave shareholders last year. Given its already-healthy dividend yield of 2.5%, any added payout would simply be icing on the cake for long-term investors.
Not your typical dividend stock
Most investors don't think of tech stocks as being a good hunting ground for dividends. That's typically because the ordinary small technology specialist needs to spend every penny it can get its hands on in order to build out its own internal business and finance its own expansion. Returning capital to shareholders isn't its best use, and growth investors don't want the money back in any event.
But Microsoft is a mature player in the tech space, and it has plenty of cash to pay back. With cash-cow franchises like its Office software and its Windows operating system, Microsoft brings in billions in cash flow every year, giving it plenty of money to use to establish itself as a respectable dividend giant.
Microsoft's 1.5% dividend yield isn't anything special, but in the context of an impressive share-price move higher, it's noteworthy. Even better, Microsoft has given 16 straight dividend increases on an annual basis. Last year, Microsoft's dividend increase took effect a week or so before Thanksgiving, so investors right now have some time before a possible announcement in the next couple of months.
Making the dividend call
By contrast to tech, telecom companies are among the most famous when it comes to dividend yields. Just about every telecom specialist has spent billions developing a proprietary network infrastructure, and once built, those networks bring in plenty of cash flow that can go back to shareholders as dividends. Even companies as big as Verizon Communications tend to have plenty of money left over to pay to shareholders, and its 4.5% yield tops the 30 stocks in the Dow Jones Industrials.
For 13 years, Verizon has given its shareholders something to celebrate each year, although the size of its increases has sometimes left something to be desired. For instance, last September, Verizon announced a dividend increase of just 2%, taking the payout to $0.59 per share quarterly. Given the need to spend money on 5G network improvements, it's likely that Verizon will be cautious with its capital, but it'll likely take steps to ensure that it keeps its dividend increase streak alive.
Be smart with your dividends
Investors look forward to rising dividends, and these companies are just some of many that are fairly predictable in their payout boosts. There's no guarantee that these three stocks will increase their dividend payouts, but not to do so before the end of 2018 would mark a major departure from their past behavior dating well back in the past.
