Income investors love dividend stocks, because they offer healthy amounts of current income as well as the prospect for share-price growth. That powerful combination can lead to extremely strong long-term returns over time.
Some dividend stocks have so much success with their underlying businesses that they're able to boost their dividend payouts on a regular basis. In fact, a select few have turned dividend increases into a science, almost always announcing annual increases at the same time of year. Below, I'll examine why income investors should look closely at AT&T (T -1.42%), ABM Industries (ABM -2.47%), and Erie Indemnity (ERIE -0.43%) to see if they deliver a nice holiday gift to their shareholders in the form of higher quarterly dividends.
Connect with dividends
AT&T needs little introduction for most investors, with the ubiquitous wireless network provider having roots dating back more than a century to the invention of the telephone. Along the way, the company has become one of the highest-paying dividend stocks among blue-chip companies, sporting a nearly 7% current yield.
From a fundamental perspective, investors haven't been entirely happy with AT&T. Concerns about price wars among major carriers have weighed on the share price. Yet AT&T has gone through similar cycles before, and that hasn't stopped the company from boosting its dividend every year for 34 straight years. Moreover, the telecom giant usually makes its announcement in mid-December, and a higher payout could calm nerves among shareholders worried about competitive pressures in the industry. Investors in AT&T shouldn't expect more than a minimal boost, but even that could restore confidence that the wireless provider's stock's in better shape than many think right now.
Building a strong foundation
ABM Industries is far from a household name among investors, especially compared to AT&T. Yet the company's an important player in the business services industry, providing services related to buildings and grounds ranging from HVAC and mechanical systems to janitorial and landscape work. The New York-based company dates back to the early 20th century, and it remains an important player in helping businesses make the most of their space.
ABM sports an even longer track record of dividend success than AT&T, with 51 straight annual increases helping to support its current 2.3% yield. The company usually reports fiscal fourth-quarter earnings in mid-December, and last year's dividend increase announcement came then, with a boost of 3%. A similar increase, likely to $0.18 per share, is probable this year, and if results remain strong, ABM could get a nice boost going into 2019.
Insuring shareholder income
Finally, Erie Indemnity is another relatively obscure company, but the insurance provider has done a good job of ensuing that its shareholders get consistent boosts to the income that they receive from owning the stock. The insurance industry is a good place for dividend investors, and for 28 years, Erie has given investors annual dividend increases, most often coming in December. With a dividend yield of 2.5% already, an increase would be icing on the cake for Erie shareholders counting on its income.
This time last year, Erie delivered the goods for dividend investors, with a more than 7% boost to the quarterly payout in the second week of December. A similar boost this year would bring Erie's dividend to $0.90 per share every three months, signaling another vote of confidence in the insurer's ability to continue its dividend growth streak well into the future.
Enjoy the holidays with higher dividends
Top stocks with a history of dividend growth are often predictable in when they'll spring good news on their shareholders, and by recognizing that fact in advance, you can be prepared when companies make their dividend announcements. Investors in these three stocks should look forward to more good news in December -- along with larger quarterly dividend payments through 2019 and beyond.