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Dividend Increases Should Come Soon for These 3 Stocks

By Dan Caplinger - Jan 22, 2020 at 8:57AM

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Just how big could the boosts be?

Dividend stocks give shareholders the best of both worlds. Not only can you receive regular income quarter after quarter, but you can also enjoy the benefits of share-price growth when the companies you invest in perform well fundamentally.

There's an elite group of dividend stocks that have built up long track records of delivering dividend increases year in and year out. Among them, some stocks are quite predictable about when during the year they're most likely to announce a new dividend hike. Today, we'll look more closely at Coca-Cola (KO -0.27%), Kimberly-Clark (KMB -0.19%), and Walmart (WMT -11.38%) to see why you can expect to see some dividend action in the near future.

Fizzing over with dividend growth

Coca-Cola has one of the most impressive dividend growth streaks in the market, with annual increases dating back for 57 straight years. The beverage giant's stock currently yields 2.9%, with its most recent dividend increase having come in March 2019 and amounting to an almost 3% rise over its previous payout. Investors now receive $0.40 per share each quarter.

Semi tractor trailer with pictures of Coca-Cola bottles on them.

Image source: Coca-Cola.

Coca-Cola's brand is known around the world, and it's proven that it can answer the call to adapt to changing consumer preferences. In particular, as consumers sought healthier alternatives to sugary carbonated beverages, Coca-Cola answered the call with a mix of bottled waters, juices, and low-sugar soda products. In addition, smarter packaging decisions that included smaller portion sizes appealed to shoppers while boosting the company's profits. Coca-Cola already pays out a high percentage of its earnings, so future increases might be on the small side. But with the company typically announcing dividend increases in February, investors can expect at least a slightly higher payout soon.

Cleaning up for investors

Kimberly-Clark is a major player in the consumer products space, with offerings that include Kleenex tissues and Huggies diapers. The company sports a 47-year track record of annual dividend increases, with a current yield of 3% and quarterly payouts of $1.03 per share. Kimberly-Clark last boosted its payout in March 2019, adding $0.03 to its previous $1 per share dividend.

Investors expect Kimberly-Clark to announce its full-year earnings results on Jan. 23, and that's traditionally been when it's announced higher dividend payments as well. Fundamentally, Kimberly-Clark has had to deal with significant challenges, as fierce competition and a strong U.S. dollar have weighed on its results. However, there've been signs lately that Kimberly Clark is poised to fight back, especially on the international front, and that could help it restore some of its former glory. If CEO Mike Hsu and his management team can reaccelerate revenue gains, then Kimberly-Clark could deliver a more impressive dividend hike that last year's $0.03.

A store full of dividends

Finally, retail colossus Walmart needs no introduction. The company's network of retail department stores has no equal, and its emphasis on low prices has resonated with consumers for half a century and will continue to do so well into the future. Walmart has also been a good pick for dividend investors, as it's put together a 46-year streak of rising annual payouts. The last increase came last March, with a 2% boost to $0.53 per share on a quarterly basis. The stock currently yields 1.8%.

That dividend yield might seem low, but it largely reflects the big increase in Walmart's stock price recently. Investors have gotten far more comfortable with the retailer as it has demonstrated an ability to fight on the e-commerce front while also remaining true to its conventional brick-and-mortar customer base. Innovations like in-store pickup have also helped keep Walmart in the game, and even as the retail industry evolves toward new ways of doing things, Walmart has what it takes to avoid getting left behind. Based on past experience, Walmart shareholders can expect to hear about a little something extra in their dividend check sometime in February.

Look for higher dividends

It's never a sure thing that a company will boost its dividend. But for Walmart, Kimberly-Clark, and Coca-Cola, rising dividends are a tradition that the three companies will be hesitant to break. That bodes well for income investors looking for a bit more from their portfolios in 2020.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$131.35 (-11.38%) $-16.86
The Coca-Cola Company Stock Quote
The Coca-Cola Company
$65.78 (-0.27%) $0.18
Kimberly-Clark Corporation Stock Quote
Kimberly-Clark Corporation
$138.66 (-0.19%) $0.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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