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Are You Missing Out on These 3 New Dividend Raises?

By Eric Volkman – Dec 2, 2021 at 8:45AM

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A trio of famous stock market names just declared beefy increases to their shareholder payouts.

We're nearly at the end of the year, which also means the end of the fiscal year for a vast number of publicly traded companies. And what do the best dividend stocks on the market do once every year? That's right, they declare dividend raises.

With that firmly in mind, let's take a look at three very recent dividend raises from a trio of top-flight companies in their respective fields -- Nike (NKE 2.44%), PepsiCo (PEP -0.48%), and McCormick (MKC 0.04%). Happily, there is still time for investors to take advantage of each before their respective ex-dividend dates slam the door shut. Happy investing!

A big collection of $100 bills.

Image source: Getty Images.

1. Nike

In what has to qualify as a nice holiday gift, Nike is playing Santa with an 11% hike to its quarterly payout. The new level is just over $0.30 per share.

The long-reigning king of athletic footwear and apparel has had much success lately with its "consumer direct acceleration strategy," (CDA) which it credits for recent strong lifts in cash flow. As it says on the label, CDA is a push to reach consumers through more direct sales channels such as apps, websites, and proprietary stores in the world's top cities.

This is working. In the inaugural quarter of Nike's fiscal 2022, the company managed to lift its revenue by 16% year over year to over $12 billion -- no mean feat given the supply disruptions engendered by the coronavirus pandemic. Of that figure, $4.7 billion came from Nike Direct, a nearly 30% improvement over the year-ago figure. This helped lift headline net income by a robust 23%, to almost $1.9 billion.

Amazingly, analysts were expecting an even better bottom-line performance than that. It's saying something about the quality of a company that outside expectations for it are so high.

They remain so. Despite those persistent supply chain problems, analysts tracking the stock are collectively anticipating continued double-digit growth from fiscal 2022 to 2023, for both revenue and per-share profitability.

Nike's new dividend will be paid on Dec. 28 to investors of record as of Dec. 6. At the most recent closing share price, it would yield 0.7%.

2. PepsiCo

Speaking of companies managing to navigate supply chain difficulties, there's PepsiCo. The drinks-and-snacks mainstay is hiking its quarterly distribution following a successful quarter. The raise is 5%, to slightly over $1.07 per share.

It's likely PepsiCo would have bumped it higher anyway; after all, the company is a Dividend Aristocrat that's nearly a Dividend King, having lifted its payout at least once annually for 49 years running.

While drinks and snacks certainly require some innovation (and plenty of marketing spend) to succeed and grow, this isn't a relatively high-expense business. That's one reason the company is a cash-generating monster, with billions flowing through its coffers every year. In 2020, for example, its free cash flow amounted to almost $6.4 billion, nearly 20% higher than the 2019 figure.

PepsiCo is far from lazy, though. Management has been effective in boosting all-important sales volumes in both drinks and snacks. In the company's Q3, these rose a respective 8% and 4% -- quite admirable considering just how mature its brands are (PepsiCo's portfolio includes Pepsi, of course, but also Tropicana orange juice, Doritos, and a score of other familiar names).

There are always more of these to sell to a massive consumer base that knows and enjoys them. While PepsiCo will rarely, if ever, show growth spikes, its business should continue to rise steadily...and continue throwing off mounds of cash as it does so.

PepsiCo will serve up its dividend next Jan. 7 to stockholders of record as of this Friday, Dec. 3. The stock would yield 2.7% at its current price level.

3. McCormick

Another steady grower whose products you can probably find in your kitchen is spice-and-condiment specialist McCormick. Like PepsiCo it's a Dividend Aristocrat, having done the once-annual dividend raise thing 36 times consecutively. This year's model for its quarterly payout is a 9% increase to $0.37 per share; double the amount paid as recently as 2014.

Many of us are still reluctant to leave our homes, leading to growing interest in home cooking. This plays perfectly into McCormick's business and, combined with the company's frequent acquisitions, has juiced growth. In its most recently reported quarter, McCormick managed to grow its top line by 8% over the same period a year ago, with non-GAAP (adjusted) per-share earnings rising 5%.

For the entirety of this year, the picture looks even tastier -- McCormick is guiding for growth of 12% to 13%. As with PepsiCo, these are very good numbers for a company with such a well-established, longstanding business. And even though it trimmed its adjusted earnings forecast a bit, it still anticipates that this will land 5% to 7% higher than the 2020 figure.

And as those results improve, this company that is so determined to add to its dividend will almost indubitably continue to do so. McCormick stock is money in the bank. The enhanced dividend would yield 1.7% on the company's most recent closing share price. It is to be handed out next Jan. 10 to investors of record as of Dec. 31.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nike. The Motley Fool recommends McCormick. The Motley Fool has a disclosure policy.

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