If you're looking for dividend stocks, consider companies that have raised their payouts in the past. Otherwise, your real dividend income may diminish over the years, due to inflation. And if a company is increasing its dividend, that's generally a positive sign that the business is growing and doing well.
Three stocks that recently announced dividend increases (of at least 10%) are McDonald's (MCD 0.42%), Roper Technologies (ROP 4.23%), and General Motors (GM 4.45%). Not all of them are high-yielding stocks, but they can be promising income investments to hold for the long term.
1. McDonald's
Fast-food giant McDonald's has been a top dividend stock to own for years. It has regularly increased its payouts, and generous rate hikes are no surprise to its seasoned shareholders.
In October, the company announced its latest increase, which was a 10% increase to the payout. The company will distribute the new quarterly cash dividend of $1.67 on Dec. 15.
NYSE: MCD
Key Data Points
At the new rate, the stock now yields 2.3%, which is higher than the S&P 500 average of 1.5%. McDonald's has increased its dividend payments for 47 straight years and is on track to become a Dividend King in a few more years.
The company's robust business makes it an attractive option for dividend investors. In the trailing 12 months, McDonald's has generated revenue of more than $25 billion, with earnings totaling $8.3 billion -- good for a margin of 33%.
The company's high margin at a time of high inflation is a testament to its ability to protect its margins and do well, despite facing challenging macroeconomic conditions that are crippling other businesses.
McDonald's is a solid, steady investment you can safely hold in your portfolio for perhaps forever. Its strong brand and growing dividend make it an ideal stock to hang on to for the long haul.
2. Roper Technologies
Roper Technologies is a diversified technology company that focuses on niche markets. From healthcare to education to media and entertainment, its software helps many different industries.
Many of its businesses generate less than $250 million in revenue, but in total, this business routinely reports more than $5 billion in annual revenue. And in the trailing 12 months, Roper has accumulated $2.9 billion in earnings on just under $6 billion in sales, for an impressive profit margin of nearly 50%.
NASDAQ: ROP
Key Data Points
The company's strong financials give the business plenty of stability and room to raise its payout. Last month, it announced it would be raising its dividend for the 31st consecutive year. The 10% increase would push the quarterly payment to $0.75.
Although the stock yields a fairly modest 0.6%, Roper's large gains over the years more than compensate for the lackluster payout. In five years, shares of Roper have risen by 78% (the S&P 500 is up by 63%).
The stock gives investors a good mix of dividend income and growth potential. And with a payout ratio of less than 25%, there's plenty of room for the payout to go higher.
3. General Motors
General Motors (GM) and other automakers recently hammered out new labor deals with the United Auto Workers. Now that the parties have reached new agreements, there's clarity about the path ahead.
And while GM is expecting $9.3 billion in additional costs through until 2028 due to the new deals, it still plans to buy back $10 billion shares of stock and is increasing its dividend by 33%.
NYSE: GM
Key Data Points
The formal dividend increase hasn't been declared just yet (that will happen next month), but management expects to increase the dividend to $0.12, up from the current payment of $0.09. The increase would put GM's dividend yield at around 1.4% -- currently, it's at 1.1%.
The company expects strong profits this year, with net income in the range of $9.1 billion to $9.7 billion. Last year, GM reported a profit of $8.9 billion.
The economy isn't in great shape and demand for new cars may not be strong in the near term. However, with GM's stock trading at less than 5 times its estimated future earnings and the labor dispute over, now could be an advantageous time to buy shares of the automaker, as there's a good margin of safety there for investors.
