Though most of the companies are treading with caution these days due to unpredictable market conditions, a few names have always put investors’ interest first and have been adding immense value to their worth. These investor-centric companies recently announced an increase in their dividends much to the joy of their investors.Â
Increased sales and undivided attention to investors
In the retail sector, if there is one stock that is growing steadily in spite of strong competitors and cautious investment from shareholders, it is Best Buy (BBY, Financial). Recently, the quarterly dividend per share of Best Buy was raised to $0.23 per share, an increase of 21% from the last quarter. Shareholders were also pleasantly surprised recently as Best Buy paid out special dividends worth $0.51 per share. This move played a big role in increasing the brand image of the company to a great extent among its shareholders.
The company has been going through a great phase as far as its net income is concerned. However, investors should remember one point here. They should not be misguided by the surge in net income. The increase in income was because Best Buy was involved in some large scale cost cutting initiatives during the first quarter of 2015 and not because the sales margins were impressive. If the effect of this cost cutting initiative was taken off, incomes for Q1 2015 were almost the same as Q4 2014 at around $14 billion. The top management of Best Buy has already informed investors that there would not be much progress for 2015 because of reduced prices and lack of takers for its warranty programs. Nevertheless, with frequent increases in dividends and a reasonable customer reputation, Best Buy is a stock that is worth investing in right now. Here is the trend of Best Buy’s quarterly net income for the last few quarters:
Good capacity to generate cash flow
Next on the list of promising companies that raised their dividends recently is the gaming retailer, GameStop (GME, Financial). One of the strong points about the company apart from the fact that it raised its dividends recently is that it has immense capacity to increase its cash flow in the future. Currently the company has ten times free cash in its hand than it should in order to pay out the increased dividends. Recently, the quarterly dividend per share was increased to $0.36, which was an increase of 9% from last quarter. The other point in favour of GameStop is that it reported a 6% increase in its main business, software services. This, to an extent, offset the 32% decrease that its hardware business suffered during the last year. In reality, the market is not noticing the fall in hardware segment and it is only focussing on the positive factor of GameStop - its cash generating capacity. It is purely because of this that the company has been able to raise its dividends consistently as we can see from this chart below:
Conclusion
Stocks with consistent increases in dividends are the ones that you need to choose if you are looking to invest for income purposes. With their stability of performance and sole aim of adding value to investors’ worth, these stocks are well respected by shareholders. The best part about these stocks is that they have immense growth prospects for the future and hence are expected to grow at a reasonable rate, thereby returning a handsome amount of money to investors. Retail and gaming sectors are two of the high-growth sectors of today and these stocks are some of the most promising ones among the many stocks available in the market, purely from the investors’ point of view.
