3 Stocks Likely To Drop Huge Dividend Hikes In December

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We’ve hit the best time of year to roll out one of our most powerful dividend “hacks.” Timed right, this will provide us with a hefty payout yielding more than 5% — and triple-digit growth as well.

The best part is that we can make this proven dividend-growth system “work” in just two quick steps, which we’ll go over now. Then I’ll name three stocks you can buy today so you can give yourself a shot at “front running” double-digit payout hikes—and even faster capital gains!

Step 1: Buy as soon as the dividend increase is announced

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We will begin our purchase “timing” as soon as the dividend increase is announced. This is a veteran move because the company’s stock almost always rises with its payout, and there is often a lag between the announcement of the hike and the increase in the stock.

You can see this set-your-watch-to-it pattern in the shares of Texas Instruments (TXN), my . a holding of hidden yield It has delivered a 138% price gain (and a total return of 168%) since we bought it in June 2017.

You can see the pattern in action in the chart below, when the dividend jumps and the stock price follows suit with a slight lag. This is our window to buy, as first level investors are holding and bidding on the stock!

This is the first phase of our dividend-and-price-gain tango—just before the trusted dividend producers announce a hike in their shares. and because management Love To reward investors nearing the end of the year, we have a fleet of them to choose from — we’ll look at three specific year-end dividend raisers below.

We are fully prepared to profit here as well as we are entering the best three months in the stock market.

According to the numbers from 1950 to 2017 stock traders calendar November and December are the two best months for stock performance, with average gains of 1.5% and 1.6%, respectively. January has historically been a strong month, with a 1% gain, making it fourth.

Step 2: Add a Low Payout Ratio for the Strongest Dividend (and Value) Gain

So we’ve got a predictable dividend-growth pattern and seasonality working in our favor. Next we want to look for a reasonable payout ratio, which is the percentage of free cash flow (FCF) — the best snapshot of the cash a company is generating — that is absorbed by dividends. When it comes to dividend protection, I call for a ratio below 50% — and for maximum dividend growth, the lower, the better.

Now let’s look at three names that tick our box with strong likelihood of announcing big dividend hikes in December, along with the financial strength to double (or more!) their payouts in short order.

Abbott Dividend—and Shares—Set for a Second Big Pop

medical equipment manufacturer Abbott Laboratories (ABT) sent a message last December when it delivered the biggest payout increase in its history—a 25% increase that immediately jumped its stock to last year’s all-time high.

Over the past five years, Abbott has increased its dividend by 70%, driving the yield on purchases made at the time to 4.4% today, far higher than the stock’s yield of 1.4% now.

This year, you’ll want to round up December 10th on your calendar, because it’s the second Friday of the month—the exact same time Abbott announced his double-digit hike last year. Because another big boost is likely on the way.

I say that because the company posted solid third-quarter results, total sales increased 23.4%, on double-digit gains across its divisions. The diagnostics business stole the show, thanks to BinaxNow and Panbio’s healthy sales of at-home COVID-19 tests and its ID Now COVID testing system for clinics and doctors’ offices.

Even without the COVID tests, sales still increased by 11.7%. Free cash flow is also rising, another factor driving the stock higher (and consequently Abbott’s FCF payout ratio of 33%) is very low.

Finally, don’t be distracted by Abbott’s seemingly high P/E ratio of 31.9—it’s actually a deal in disguise! At this time last year, the stock traded at a “nose-off” 60-times trailing-12-month earnings and Even then Delivered the big payment-driven pop we just saw. This year, with better valuations, I am expecting more.

A Canadian Bank With a Pent-Up Payout Hike

Canadian banks are an untapped resource for many American investors, and I’ve always wondered why. For one, they yield higher than their American cousins ​​- take Toronto Dominion Bank (TD), which compared to 2.4% for 3.5%, as I write this JPMorgan Chase & Company (JPM) and only for 1.6% Wells Fargo (WFC).

TD is Canada’s most “Americanized” bank, with almost as many branches south of the border as its home country (about 1,100 in the US, compared to 1,085 in Canada).

TD’s Canadian and US businesses are also profiting from both higher trading volume and stronger loan originations. TD is well positioned to profit on the difference between rising yields on 10-year Treasury notes (and 5-year government bonds in Canada), which determine interest rates on loans offered to customers, and approximately Zero overnight rates are set by the Federal Reserve (and the Bank of Canada) at which banks lend to each other.

The real catalyst is that TD and other Canadian banks have been approved by the Canadian government to resume dividend growth as the COVID-19 crisis worsens. Given the bank’s long dividend history (it’s been paying dividends since 1857) and strong business performance, we can expect to announce an increase on any given day – and it’s likely a 7% increase (in Canadian dollars). Will assume the bank had announced last time, pre-covid.

Let’s get ready for our progressive special payment

Our hidden yield members will know Progressive (PGR) Well. If a new customer is worth insuring, the auto insurer uses a secret-smart strategy through an algorithm. If they’re too risky, it bumps up a higher bid, giving the company two ways to win: The customer either takes the bid or outdoes (and that becomes a problem for!) its competitors. one of.

The company applies a similar strategy to its payments, yielding $0.10 per quarter, but paying out the bulk of its dividend as a special payment that begins in early December (or after). Factor in last year’s special payout and you get a trailing-12-month dividend yield of 5.4 percent. And with an FCF payout ratio of just 37%, Progressive has plenty of room to start another healthy “special” this year.

Finally, like the TD, rising interest rates make progressive gains as it invests its “float” (or the premium it collects) in safer interest-bearing securities, as claims have to be paid at some point. would be required.

Finally, its cash flow is growing strongly: FCF per share has risen 242% over the past five years, and like dividend growth, is another strong driver of future share price increases.

Brett Owens is Chief Investment Strategist Contrarian Outlook, For more revenue streams, get your free copy of their latest special report: Your Early Retirement Portfolio: 7% Dividend Every Month Forever,

Disclosure: none

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