Image: Brinker International.
The only thing better than a stock that pays a healthy dividend is one that grows its dividend consistently year in and year out. One secret that income investors have learned is that many stocks reliably increase their dividends around the same time every year, and those in the know can anticipate when future payout boosts will come. In our quest to unearth higher income potential, let's take a look at three dividend stocks that are likely to announce dividend increases in the very near future.
Altria stock is smoking-hot
Cigarette giant Altria Group (MO +1.03%) has been one of the best long-term performers in the stock market, with a healthy combination of capital appreciation and dividend income helping produce mammoth returns for longtime shareholders. Altria already has a dividend yield near 4%, and typically, it has announced dividend increases in mid-August. Recent boosts have been in the 8% range, so a raise from the current level of $0.52 per share to $0.56 would be consistent with past practice.
Image: Altria.
Altria's latest earnings point to the company's ongoing success, with net earnings growth of 15% in the most recent quarter giving the tobacco giant ample room to increase payouts. Cigarette volumes have actually risen recently, bucking a long-term decline in smoking activity, and Altria sees substantial promise for its reduced-risk products as well as other divisions under the company's corporate umbrella. With 45 straight years of increases under its belt, Altria shareholders will almost certainly get bigger checks next quarter.
Brinker International should look tastier soon
Restaurant operator Brinker International (EAT +0.47%) isn't a household name, but its Chili's Grill & Bar and Maggiano's Little Italy concepts have been leaders in the casual-eating chain industry for years. With a yield of around 2%, Brinker isn't the most generous dividend stock out there, but the restaurant chain has quietly put together a 10-year streak of increasing dividends every fiscal year.
Recently, Brinker has been putting capital to work in ways other than paying shareholders. In June, the company announced plans to spend more than $106 million to bring more than 100 franchised Chili's locations back under corporate ownership. CEO Wyman Roberts said that the move would allow Brinker to extend its loyalty program to the restaurant locations and make greater use of Chili's internal operational infrastructure. Yet the current dividend works out to less than half of Brinker's earnings, and with last year's 17% increase to $0.28 per share coming in late August, Brinker investors should look for a boost to the $0.32 or $0.33 per share range for 2015.
Illinois Tool Works could construct higher dividends
Among dividend stocks, Illinois Tool Works (ITW 1.05%) has a solid reputation, with 40 straight years of annual payout raises. The company serves a wide range of industries ranging from automotive and construction to food equipment, electronics, and welding. By helping its customers get the products and equipment they need to do their own work, Illinois Tool Works has been consistently profitable, and it now pays a 2.2% yield to its shareholders.
In past years, Illinois Tool Works has announced a dividend increase fairly early in August, and so another increase could come any day now. With last year's boost amounting to 15%, shareholders could see the current $0.485 per share quarterly payment increase toward the $0.55 to $0.56 per share range. With the company having raised its earnings guidance for the year and with strong margins helping it overcome some revenue headwinds, Illinois Tool Works should have the capacity to keep its dividend increase streak alive.
Dividend investors love it when their stocks boost their payouts, and often, companies foreshadow future dividend increases simply by creating a habit of announcing them at the same time each year. By being aware of these tendencies, you can anticipate when dividend increases will occur and be ready to capitalize when the time comes.
