Don’t settle for dividend stocks that don’t increase their payouts. If a dividend-paying company is doing well, it should generally have room to increase its dividend, even if only by a modest amount. Not only is it a good indicator that the company is doing well, but it also means more dividend income for you. Three companies that increased their dividend payments this month are Real estate income (NYSE:O), Goal (NYSE: TGT)And FedEx (NYSE:FDX).
1. Real estate income
Realty Income pays monthly dividends, and the Real Estate Investment Trust (REIT) provides a good, diversified income investment. The REIT’s portfolio includes a broad mix of tenants from all parts of the economy. It doesn’t just focus on apartments or hospitals. Instead, it has more than 1,500 customers across 89 industries.
The REIT often makes multiple dividend increases during a year, but since the payments occur every month, they are often not huge. On June 11, the REIT announced that its monthly dividend would increase again, from $0.2625 to $0.2630. The payment, scheduled for July, is 16% higher than what the company paid to its investors five years ago: $0.2265. The stock’s 5.9% yield means you could collect more than four times as much as the average S&P500 shares, where the average return is approximately 1.3%.
This year, the REIT expects normalized funds from operations per share to be between $4.17 and $4.29. which would be well above the current annual dividend level – $3.16. Realty Income’s high dividend yield may not remain as high as interest rates fall; by then the stock could recover. For income investors, now is a great time to buy shares of this top dividend stock.
2. Purpose
One of the top reasons investors like to own Target stock is the Minneapolis-based retailer’s consistently growing dividend. At 3.2%, investors can already get an above-average payout from the retail shares. What makes the deal sweeter is that Target is also a Dividend King, having not only increased its payout for years decades.
That’s why Target’s latest dividend increase announced this month was business as usual, without much fanfare. The company said it has increased its dividend by a fairly modest rate of 1.8%, while extending its dividend growth streak to a whopping 53 consecutive years. But Target has made bigger increases in recent years after benefiting from a surge in pandemic-driven traffic to its stores. The new quarterly dividend of $1.12, payable in September, is 70% higher than the $0.66 it paid to shareholders five years ago.
It hasn’t been a great year for Target stock, as shares are up just 1% since January. But with a modest valuation of 16 times current earnings and the fact that it’s a retail leader, this could be another solid income-producing stock to buy and hold for the long term.
3. FedEx
The largest dividend increase on this list comes from logistics company FedEx. Last week, the company announced it would increase its annual dividend by 10% to $5.52.In five years, the company has more than doubled its dividend payments. But even with the increase, the stock’s yield now stands at 2.2%, which is still the lowest rate on this list.
FedEx shares are down this year. Economic conditions haven’t been great, and that’s clearly reflected in the company’s results, as sales have fallen due to weaker demand. For the nine-month period ended Feb. 29, the company’s revenue was $65.6 billion, down 4% from the same period a year ago.
The good news is that as economic conditions improve, the company will be in much better shape going forward. It currently trades at just eleven times estimated forward earnings, and it could be a bargain right now for both dividend and growth-oriented investors.
Should you invest €1,000 in real estate income now?
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends FedEx, Realty Income, and Target. The Motley Fool has a disclosure policy.
3 Dividend Stocks That Recently Increased Their Payouts was originally published by The Motley Fool
