Every single stock among the 30 components of the Dow Jones Industrials (DJINDICES:^DJI) pays a dividend, and the recent moves in the Dow to admit three new companies to the prestigious index didn't change that fact. But the troubling thing about all three of the Dow's newest members is that their yields are relatively low. Will dividend increases come soon?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the newest Dow components to see whether higher dividends are likely to come soon. He points out that Goldman Sachs (NYSE:GS) and Nike (NYSE:NKE) both have yields in the 1.2% range, while Visa (NYSE:V) has a rock-bottom yield of just 0.7%. Yet all three companies have gone four quarters without raising their payouts, suggesting that the companies are due for an increase in their payouts.
Among the three stocks, Dan finds that Nike has the best track record of dividend increases, with consistent raises going back 10 years. Even though Nike's payout ratio is more than double Visa's and Goldman's, the athletic-products giant seems most likely to come through with a dependable dividend increase. Yet if Goldman can continue to satisfy regulators and if Visa chooses to accelerate its past pace of dividend growth, all three stocks could end up looking a lot better to income investors in the near future.
Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs, Nike, and Visa and owns shares of Nike and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.
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