These dividend stocks have recently made payout upgrades.
By usnews ( Wayne Duggan, Contributor)
These companies just raised their dividends.
The 2020 economic downturn has put extraordinary financial pressure on most companies, and a number of popular stocks have cut or suspended their dividend payouts this year to protect their balance sheets.
Royal Dutch Shell (ticker: RDS.A, RDS.B) is just one example of a company that slashed its dividend by 66% in 2020, the company’s first dividend cut since World War II. Despite all the dividend carnage, there are also plenty of companies that have healthy enough businesses and balance sheets to actually raise their dividends heading into 2021. Here are seven stocks that raised their dividends in December.
Abbott Laboratories (ABT)
Abbott Laboratories is a diversified health care company and a member of an exclusive club known as the Dividend Aristocrats, stocks that have raised their dividends for at least 25 consecutive years.
In December, Abbott boosted its quarterly dividend by 25% from 36 cents to 45 cents, a 1.7% yield. This year marked the 48th consecutive year Abbott investors have enjoyed a dividend hike. Bank of America analyst Bob Hopkins says Abbott should also continue to grow its earnings more than 10% annually. Bank of America has a “buy” rating and $122 price target for ABT stock.
Pentair is a residential and commercial water treatment company. Pentair is also a Dividend Aristocrat and has raised its dividend each of the past 44 years. In December, Pentair raised its dividend by about 5% from 19 cents to 20 cents. Following the hike, Pentair’s new yield will be around 1.5%.
CFRA analyst Elizabeth Vermillion says Pentair has benefited in 2020 from a rise in residential and pool product demand, but she says it will take time for industrial demand to return to pre-crisis peak levels. CFRA has a “hold” rating and $56 price target for PNR stock.
Campbell Soup Co. (CPB)
Campbell Soup is a U.S. market leader in soup and snacks and is the owner of Pepperidge Farm, V8 and Prego. Campbell recently announced it will be raising its quarterly dividend by about 6% to 37 cents per share.
The stock’s new dividend represents a 3.1% yield. CFRA analyst Arun Sundaram says food-at-home demand will likely moderate in 2021. Campbell must capitalize on its opportunity to retain customers it gained during the stay-at-home environment in 2020, and Sundaram sees little near-term upside for the stock. CFRA has a “hold” rating and $53 price target for CPB stock.
Zoetis is a global market leader in animal health medicines and vaccines. The company recently raised its quarterly dividend by 25% from 20 cents to 25 cents. However, even after the dividend hike, the new yield is only 0.6%. What the stock is lacking in yield it has made up for in price appreciation in 2020, gaining about 21% in the past year. CFRA analyst Sel Hardy says 2020 has proven just how essential and resilient Zoetis’ business is, even during an economic downturn. CFRA has a “strong buy” rating and $192 price target for ZTS stock.
Bristol-Myers Squibb Co. (BMY)
Bristol-Myers Squibb is a global pharmaceutical company that specializes in oncology, cardiovascular and immunology therapeutics.
The company recently raised its quarterly dividend by 9% from 45 cents to 49 cents. The stock now yields about 3.2%.
Bank of America analyst Geoff Meacham says Bristol-Myers has an attractive valuation and a strong pipeline of late-stage drugs and new product launches heading into 2021. Meacham says the market doesn’t appreciate that growth opportunity given the stock still trades at less than 10 times projected 2021 earnings per share. Bank of America has a “buy” rating and $80 price target for BMY stock.
Global biopharmaceutical company Pfizer has made plenty of headlines in 2020, but few have been about its dividend.
In December, Pfizer’s COVID-19 vaccine became the first vaccine approved by the U.S. Food and Drug Administration to combat the pandemic. Pfizer also recently issued a modest 1-cent quarterly dividend hike, raising its payout to 39 cents. The stock’s new yield is now about 4.2%. Hardy says the COVID-19 vaccine is the biggest near-term catalyst, but he is also bullish on the company’s promising oncology drugs. CFRA has a “strong buy” rating and $50 price target for PFE stock.
Chipmaker and iPhone supplier Broadcom has been a top performer in 2020, gaining about 35% year to date. The icing on the cake is the stock’s quarterly dividend, which the company recently raised by 11% to $3.60.
The new payout represents nearly a 3.4% yield. Bank of America analyst Vivek Arya says Broadcom generates high-quality revenue growth at a compelling valuation and has a best-in-class dividend yield among its semiconductor peers. Broadcom is exposed to secular growth trends such as smartphones, cloud data centers and enterprise storage. Bank of America has a “buy” rating and $500 price target for AVGO stock.
Seven stocks that just boosted their dividends:
- Abbott Laboratories (ABT)
- Pentair (PNR)
- Campbell Soup Co. (CPB)
- Zoetis (ZTS)
- Bristol-Myers Squibb Co. (BMY)
- Pfizer (PFE)
- Broadcom (AVGO)