If you are a shrewd investor, you will choose only companies that have been paying out well to its investors. Mostly dividend aristocrats, or companies that have been increasing their dividends for 25 years consecutively, are highly preferred by investors. This is because in order to combat the volatile nature of the stock market, investors need stability of returns. Dividend aristocrats provide exactly that. In addition to this, there are few companies that have been increasing their dividends every year since they were incorporated. In those lines, the following are some of the top picks among stocks that raised their dividend pay-outs recently.
Efficient branding and increased dividends make this a hot favorite
One company that has recently increased its dividends for the 53rd consecutive year in spite of its financials hitting rock bottom, is the beverage giant, Coca Cola (KO, Financial). Though the company’s net income for Q4 2014 was only $770 million (its lowest value so far), the company didn’t disappoint investors as it announced an 8% increase in its quarterly dividends. Currently, the quarterly dividend per share of Coca Cola is $0.33 per share. In addition to this, the company has been involved in efficient branding activities as well. The carbonated beverage segment is going through a very dull phase now; Coca Cola has realised this and is focusing on its other products like Gold Peak, FUZE teas and LOHAS mineral water that have recently witnessed annual sales worth at least $1 billion dollars. For the company to sustain these dividends, it needs close to $5.8 billion worth of cash flow. As of now, Coca Cola is in a far more comfortable position at cash flows over $9 billon as of Q4 2014.Â
Stable growth drives overall good performance
The other promising stock from the ones that increased their dividends recently is the consumer goods major, Colgate Palmolive (CL, Financial). The performance for the last quarter of 2014 was in line with industry expectations and was stable enough to help share price increases. In addition to this, the company also made its investors happy by announcing an increase of 6% in its quarterly dividends. Currently, the quarterly dividend per share is $0.38. Though the company would just need around $1.4 billion to pay these increased dividends, it is currently at a very good position at around $2.5 billion worth of free cash flow generating capacity every year. The share price trend and dividends pay-out history for the last few months are seen in the charts below:
Diversified drugs and a brand name to live up to
When we are talking about investment worthy stocks here, can the ever-growing pharmaceutical sector be left behind? The stock that we are going to see now is AbbVie (ABBV, Financial). This company is a spin-off from the famous Abbott Laboratories (ABT, Financial), one of the biggest names in the pharma sector. AbbVie has been paying out dividends only since 2013; however it has the huge brand name of Abbott to live up to. The company’s strength is that it is involved in a diversified range of drugs for different kinds of ailments. The most popular drug of AbbVie, Humira (contributor of close to 63% of the company’s 2014 revenues), grew by 14% during the fourth quarter of last year. Drugs for ailments like Parkinson’s disease and lung disorders too grew by 5% and 9% respectively during Q4 2014, giving a huge impetus for the performance of the company. In terms of cash flow, AbbVie did have a bad Q4. This was because it had to pay close to $1.6 billion to Shire PLC (SHPG, Financial) as part of a failed acquisition deal. Cash flow suffered during 2014, but it is only due to a one-time settlement amount. With lots of high-performing drugs in the pipeline, AbbVie is looking at a strong future indeed.Â
Conclusion
In the light of so many dividend increases, it could be a great challenge for you to pick one. However, it is not just the dividend increases that you need to see. You must also see their performances over the last year, product expansions if any, current capacity to generate free cash flow and many other features, so that you can invest in them. The above stocks satisfy all the criteria that are needed to pay out consistently increased dividends to investors, thereby adding value to their money.
