The 30 stocks in the Dow Jones Industrials (DJINDICES:^DJI) appeal to investors as much for their regular dividend payouts as for their high-quality businesses. Many of the Dow's stocks have extremely long streaks of raising their payouts over time, and often you can count on those stocks to increase their dividends at roughly the same time of year, year in and year out.
Most of the Dow's longest-standing dividend-raising stocks tend to boost their payouts at either the beginning or the end of the year. But a few stocks prefer to make midyear changes to their dividends. Let's take a look at one Dow component that is just about due for a payout increase, as well as several other stocks from outside the average.
Caterpillar's dividend streak is far from being the longest in the Dow, with just 19 straight years of payout increases. But last year's boost of 13% whetted the appetite of dividend investors. The company has had issues with its long-range earnings forecasts, citing weakness in China as weighing down its future prospects. But even with those headwinds, the company currently pays less than 30% of its earnings in dividends, giving it plenty of room for an increase, regardless of near-term troubles.
Caterpillar made its announcement on June 13 of last year, marking the second year in a row that it chose the second Wednesday of the month to make its move. If it follows the same pattern this year, you can expect a higher payout this Wednesday.
The drug store chain company has built a 37-year track record of raising its payouts every year, with last year's increase taking the dividend up a whopping 22% to give the stock a yield of 2.2%. With the current dividend representing less than half of Walgreen's earnings per share, it's apparent that the company has further room to make an equally dramatic increase if it wants to.
Last year, Walgreen took the occasion of its fiscal third-quarter earnings release to announce its dividend increase. With the company expected to release earnings in just a couple of weeks, shareholders could get the good news before the month is out. With shares trading near all-time highs, an impressive dividend boost could be just the catalyst the stock needs to push higher.
Elsewhere in the health-related world, medical-device maker Medtronic has a 35-year history of raising its dividends annually, with a current yield of about 2%. That is a fairly paltry payout given the company's much higher earnings, which produce a dividend payout ratio of just more than 30%. Even with Medtronic facing a higher tax bill due to the imposition of Obamacare's medical-device excise tax, it's hard to argue that it doesn't have the wherewithal to make a boost to its payout this year at least as large as the 7% increase it made last year.
Medtronic made its dividend announcement last year on June 21, and in past years the company has chosen similar times in the latter half of the month to alert investors of its intentions. Barring unexpected bad news, Medtronic will almost certainly stretch its streak to 26 years before the month is out.
Target has paid higher dividends for 45 straight years, with last year's 20% boost taking the yield to about 2%. The retailer has faced some of the same difficulties as other big-box retail giants lately, including an unstable economy and pressure from online retail. But Target's strategy of bringing in brand-name designers for exclusive collections has helped it avoid some of the "showrooming" problems that its peers have faced.
Target announced its increase on June 14 last year and as early as June 8 the previous year. If it follows the same pattern, then shareholders could see more money coming their way before the week is out.
Dividends are an important part of the total returns that shareholders get from their stock investments. Make sure you know when the companies whose shares you own usually boost their dividend payments: It can clue you in on potential good news before it happens.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Medtronic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.