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Dow Dividends: Expect These Payout Hikes in April

By Dan Caplinger - Mar 31, 2014 at 12:30PM

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The Dow is a great place for dividend investors, and these stocks are in line to give them more of what they want.

The Dow Jones Industrials ( ^DJI -0.17% ) were up 142 points as of 12:30 p.m. EDT, celebrating enthusiasm among investors that the stock market can keep performing well as long as the Federal Reserve keeps rates low. One noteworthy fact about the Dow is that all 30 of its component stocks pay dividends, and those dividends look attractive when rates are so low.

Yet of even greater importance to most dividend investors is buying stocks that offering growing payouts, and many Dow stocks have the long history of annual dividend increases that those investors want. As April begins, investors should expect oil giants ExxonMobil ( XOM -0.64% ) and Chevron ( CVX -0.63% ) to raise their dividends in the immediate future, along with consumer-products mavens Procter & Gamble ( PG 1.78% ) and Johnson & Johnson ( JNJ 1.46% ).


Source: Tax Credits, Flickr.

Big Oil, big dividends
Both Exxon and Chevron have struggled to keep their production levels growing, and relatively stagnant energy prices have weighed on profit growth. Yet both oil companies have long histories of annual dividend increases, with Exxon's streak standing at 31 years and Chevron boasting a 26-year string of rising distributions.

Exxon pays the most cash out in dividends of any Dow stock, with its 10% increase last year equating to more than $11 billion in annual payouts. A rise to $0.70 per share every quarter would be a nice round figure, representing an 11% jump and leaving the stock yielding almost 3%. It would also potentially push Exxon ahead of Apple, which just edged out the energy company with a bigger dividend increase in April 2013. Meanwhile, Chevron already boasts a higher yield than Exxon, and repeating its dime per share increase in 2013 would bring the payout to $1.10 per share quarterly, creating a 3.7% yield.

Long streaks for powerful companies
Paying rising dividends for three decades is an impressive feat, but it pales in comparison to what Procter & Gamble and Johnson & Johnson have done. P&G comes into the month with a 57-year consecutive dividend increase streak on the line, while J&J weighs in with a 51-year record.

Last year, Johnson & Johnson raised its payout by a nickel per share, and a similar increase this year would push its dividend to $0.71 per share quarterly and send its yield up to 2.9%. Meanwhile, for Procter & Gamble, a rise in the $0.03 to $0.04 range could create a dividend of $0.64 per share quarterly, sending its yield even further above the 3% mark.

When to expect good news
Last year, Procter & Gamble started the good dividend news with an announcement on April 15, while both Exxon and Chevron followed up by announcing higher dividends on April 24. Johnson & Johnson rounded out the list with its April 25 increase.

Obviously, there's no guarantee that any of these companies will raise their dividends. But with their streaks on the line, it's almost certain that all four of them will do their best to reward shareholders in the same way that they have for decades.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$34,580.08 (-0.17%) $-59.71
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$159.38 (1.46%) $2.29
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$149.88 (1.78%) $2.62
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$60.89 (-0.64%) $0.39
Chevron Corporation Stock Quote
Chevron Corporation
CVX
$114.41 (-0.63%) $0.73

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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