Last week saw relatively few blue-chip companies declare dividend raises, but there were still plenty of hikes, with a sprinkling of famous names raising their payouts.
All in all, it was a good week for income investors. Here are three companies about to make their shareholders incrementally richer.
There's always been plenty of fizz in this beverage and food giant's payout. It's a dividend aristocrat -- one of the rare birds that has raised its distribution every year for at least 25 years in a row. PepsiCo will keep that status after declaring a 7% lift to just over $0.70 per share.
The company has been performing solidly of late. Earlier this year, its signature drink overtook Coca-Cola's Diet Coke as the No. 2 soda in America. Revenue for its beverages continues to grow, while its many food offerings are gaining in popularity -- the company's Latin America Foods unit saw sturdy organic growth of 18% in the quarter.
The company will likely continue to press its advantage in those sorts of markets abroad -- undersaturated regions that have taken a liking to its strong snack food brands.
Like every major American exporter, the company will struggle with a strong dollar in the coming months. But I think PepsiCo will continue to grow sales abroad, which should more than offset the effects of the strengthened currency.
Meanwhile, PepsiCo is consistently free-cash-flow positive, and in recent quarters, it has been spending less than half of that pile on its dividend. I think its enhanced payout is more than sustainable, and I'd expect that dividend-raising streak to continue well into the foreseeable future.
PepsiCo's upcoming distribution is to be handed out on June 30 to shareholders of record as of June 5.
Occidental Petroleum (NYSE:OXY)
Is this long-standing oil and gas major striving for dividend aristocracy? After all, it just raised its quarterly distribution for the 13th year in a row. That payout is being lifted by 4% to $0.75 per share. At first blush, a dividend hike looks counterproductive for Occidental. Late last year, the price of crude oil plunged, and despite recent gains, it's still 40% below where it was at this point last year.
Like its Big Oil peers, Occidental is trying to cope with this development. Its Q1 net sales fell by nearly 40% on a year-over-year basis to just over $3 billion. On an adjusted basis, it managed to squeeze out a profit of $31 million ($0.04 per share), which more or less met analyst expectations.
The company's future prospects, and those of its dividend, will naturally depend on the oil price. Many observers don't see oil prices recovering to any great degree soon, so we should expect a tough operating environment going forward.
But a nice payout is important to Occidental. Outgoing CEO Stephen Chazen recently said, "dividends -- if there is a religious activity here, I think that's it." The company's record of keeping up its distribution over the years -- through more than one oil price dive -- bodes well for its future. I'd bet on the company at least maintaining its payout at the current level.
Occidental's new dividend will be paid on July 15 to investors of record as of June 10.
I've saved the highest raise for last. Computer graphics card specialist NVIDIA has lifted its payout a mighty 15% to almost $0.10 per share.
Nvidia's performance in certain categories, particularly its traditional core of desktop PCs, has been encouraging despite weakness in other units. Its attempt to crack the smartphone market with the 2011 purchase of Icera hasn't really succeeded, and the company is looking to wind down or sell that unit's operations.
Nevertheless, NVIDIA managed to grow its revenue by 4% year over year basis in Q1, largely due to sales of souped-up graphics processors aimed at gamers. Also helping were strong results from a newer business line: automotive infotainment technology.
The PC market is famously saturated, and whatever happens to Icera will negatively impact results going forward. But NVIDIA has a solid reputation in high-end graphics processors, and the prospects for that, plus burgeoning technology like in-car systems, are bright.
Another advantage, as far as the dividend is concerned, is that the company maintains a low payout ratio: Last year its distributions amounted to less than one-quarter of free cash flow. There's plenty of space for that 15% raise -- and more if the company feels generous in the future.
NVIDIA's upcoming payout will be distributed on June 12 to stockholders of record as of May 21.
Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Nvidia, and PepsiCo. The Motley Fool owns shares of PepsiCo and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola.
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.