2022 isn't even two months old, and it's already provided a rich feast for dividend investors. A slew of companies have wasted no time declaring their latest dividend raises.
In fact, there's still time for investors to take advantage of two of these three recent ones -- from PepsiCo (PEP +1.53%), 3M (MMM 0.55%), and Gilead Sciences (GILD 0.47%) -- as they're still some distance from their ex-dividend dates. Happy hunting!
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PepsiCo
PepsiCo put a little more pep in its quarterly dividend early in February. The drinks and snacks purveyor declared that its next payout will be just under $1.08 per share, a 5% increase over its previous dividend.
This, by the way, makes 2022 the 50th year in a row PepsiCo has enacted a dividend raise, making it one the market's very few Dividend Kings. That'll cement the company's position as a dependable dividend stock.
Happily, this rests on good fundamentals. Relatively high demand (we needed comfort snacks and soft drinks for our many hours staying at home during the pandemic) helped push net revenue nearly 13% higher year over year in 2021 to more than $25 billion. The company recorded nearly equal growth in both the drinks and snacks categories. Consequently, non-GAAP (adjusted) net profit also enjoyed a 13% boost, to nearly $8.7 billion.
Now, 13% top and/or bottom-line growth is unusual and special for any veteran company. It's not certain that PepsiCo can keep that strong momentum going, particularly since the pandemic seems as if it might be fading. Still, such performance indicates a company with a sturdy business that knows very well how to take advantage of its opportunities.
PepsiCo's enhanced dividend is to be paid on March 31 to stockholders of record as of March 4. At the most recent closing share price, that would yield slightly under 2.6%.
3M
Speaking of Dividend Kings, fellow royal 3M also started the year with a dividend raise. The long-standing industrial powerhouse recently upped its quarterly distribution for the 64th year in a row, although this was only a marginal 0.6% increase to $1.49 per share.
To a certain degree, the tiny bump in dividend reflects 3M's recent fortunes. 2021 was not an easy year for the company, which as a maker of everything from Post-it notes to aerospace components had to contend with the chronic supply issues brought on by the pandemic.
Yet 3M's solid position in a great many industrial segments, plus a reworking of the company's corporate structure and a number of divestments and asset buys, have helped keep the growth engine running. In the fourth quarter, it saw all of its businesses perform better than internal expectations, and full-year sales rose at a nearly 10% clip over 2020. Annual net profit showed an even stronger improvement with a 15% advance.
The road ahead might be a bit bumpy; in a business update published in mid-February, the company said a decline in demand for pandemic-necessitated face masks would affect its results. Annual growth is expected to slow to 4% in 2022, although anticipated net profit lands comfortably within analyst expectations. In other words, growth and good bottom-line performance is still ahead for this ever-profitable manufacturer.
3M's investors will receive the raised dividend on March 12 if they are owners of record as of Feb. 18. It would yield almost 3.8%.
Gilead Sciences
As per its habit, sprawling pharmaceutical company Gilead declared a dividend raise in early February. It's giving its quarterly payout a nearly 3% bump to $0.73 per share.
Gilead is the company behind the briefly famous remdesivir (brand name: Veklury), a COVID-19 treatment that was granted Food and Drug Administration (FDA) approval in late 2020.
However, Veklury hasn't been the big score some thought it could be. Soon after the FDA's nod, numerous medical professionals cast doubt on its effectiveness. Meanwhile, the world's governments began to push heavily into vaccines to ward off the disease, prioritizing prevention over cure.
The resulting sag in Veklury's popularity dinged Gilead's overall performance. It was a key reason for the company's 2% year-over-year dip in revenue (to $7.2 billion) in Q4. Compounding this, the company entered into a profit-draining $1.25 billion legal settlement with rival GlaxoSmithKline over HIV drug patents.
So Gilead hasn't been the most popular stock lately. However, the company has many strengths that make it appealing. Despite the burdensome settlement, Biktarvy is still a go-to HIV drug and a leading product for the company. Other drugs are coming up, too, particularly in the oncology segment, and the company's pipeline is sizable.
And there's the dividend. Gilead's new payout, to be handed out on March 30 to investors of record as of March 15, yields a very healthy 4.8% at the current share price.
