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3 Stocks That Could Increase Their Dividend Payments in January

3 Stocks That Could Increase Their Dividend Payments in January

Investing in dividend growing stocks is one way to create a life-changing passive income portfolio for retirement.

Dividend growth stocks are generally well-established companies that consistently increase their earnings year after year. As expected, they give shareholders a raise every year as their profits grow. And over time, they can produce market-beating returns.

Over the past 50 years, stocks that initiated and increased their dividends have outperformed the market with less volatility, according to a Hartford Funds study. So, adding a few high dividend growth stocks to your portfolio could give your long-term returns a nice boost.

Here are three dividend growth stocks that could increase their dividends in January.

3 Stocks That Could Increase Their Dividend Payments in January

Image source: Getty Images.

1. Comcast

Comcast (NASDAQ:CMCSA) has increased its dividend for 15 consecutive years, typically announcing the new dividend payment with the release of its fourth-quarter results. The company will report its fourth quarter 2023 results on January 25.

While Comcast is saddled with a ton of debt, about $95 billion, it’s offset by its massive cable business, which generates steady recurring revenue.

Total dividends paid amounted to $3.6 billion in the first nine months of 2023, barely up from the previous year thanks to Comcast’s investment. share buyback program. Comcast repurchased $7.8 billion worth of stock in the first three quarters. Together, the two account for almost all of its free cash flow.

The dividend is protected by aggressive share repurchases and strong free cash flow at Comcast. Therefore, investors should expect another dividend increase when the company announces its fourth quarter results.

2. Herringbone

Chevron (NYSE: CVX) has increased its dividend for 36 consecutive years, despite challenging economic environments, including the recent Russian invasion of Ukraine and the COVID-19 pandemic before that. This is largely due to management’s desire to keep its balance sheet in tip-top shape.

The company mostly maintains a relatively low level of debt compared to its peers and controls its capital expenditures. It is well positioned to generate significant free cash flow from its existing assets, and a plan to acquire Hess in an all-stock deal, this could boost earnings and free cash flow next year.

Total dividend payments were $8.5 billion in the first nine months of 2023, up slightly from $8.3 billion in 2022. Share buybacks accelerated for reach $11.5 billion, using excess balance sheet cash as it works to turn around free cash flow growth. Given expectations of lower capital spending and higher margins in the future, investors should expect a strong recovery in free cash flow generation.

Investors are expected to see another dividend increase when Chevron announces its fourth-quarter financial results.

3. Black rock

black rock (NYSE:BLK) has increased its dividend every year except one since its launch in 2003. The only year it didn’t increase the dividend? 2009, following the Great Recession.

BlackRock’s balance sheet looks fantastic, with $7.1 billion in cash and $4.7 billion in unencumbered investments, compared to about $7.9 billion in long-term debt. As an asset manager, BlackRock is more sensitive to market fluctuations than other companies, so free cash flow is not as consistent as in other industries.

Nonetheless, BlackRock’s dividend is well protected. About half of its capital return program is currently devoted to share buybacks. This leaves enough room for the company to continue increasing its dividend year after year as its assets under management increase due to asset price appreciation and continued inflows of new money.

Investors should expect management to announce an annual dividend increase before the end of January if it does not announce it when it reports fourth-quarter results.

It’s Worth Doing Further Research on Dividend Growth Stocks

Finding a high dividend growth stock requires more than just finding a company that consistently increases its dividend. You need to be sure that the company will be able to continue increasing its dividend in the years to come.

These companies appear well positioned to achieve this, but not all companies that have increased their dividend can afford to continue doing so. So be sure to look into the company’s financials and research the future outlook before you take the plunge, regardless of how many years a stock has increased its dividend.

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Adam Levy has no position in any of the stocks mentioned. The Motley Fool recommends Chevron and Comcast. The Mad Motley has a disclosure policy.

3 stocks that could increase their dividend payments in January was originally published by The Motley Fool

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