Our quest for finding solid dividend-paying stocks for our retirement portfolios isn’t quite never-ending, but it’ll always be a work in progress.
It’s great when we managed to find income stocks that improve their payouts every year … but it’s even better when those upgrades come in double-digit swaths.
And it’s also one heck of a bonus when such a dividend hero can also provide us with double-digit share appreciation on top of that regular cash.
Today, we’re looking at three stocks that have provided this “double bonus,” experiencing hikes to both their dividend and their share price by at least 10% each:
52-Week Dividend Growth: 10%
52-Week Stock Appreciation: 26%
Dividend Yield: 2.4%
Don’t let this dull name fool you: ADP (ADP) is a winner on every level for your retirement portfolio every year. I listed the payroll processing and human resources management firm as a Hidden Dividend Gem back in May, and it continues to anchor a place in our Dependable Dividends list with 38 consecutive years of improved payouts.
It most recently logged a 10% dividend increase in January 2013, from 40 cents quarterly to 44 cents. But this solid company is also a stock-appreciation winner, besting the market’s 20% gains by nearly 6 percentage points year-to-date.
ADP’s most recent earnings weren’t spectacular, with Q4 profits falling 10% year-over-year on revenues that improved 7%. ADP telegraphed the hit earlier in the year, which included a 9 cents per share one-time non-cash goodwill related to the 2011 acquisition of ADP AdvancedMD, and lower yields on client fund balances.
Still, full-year profits were up 12% on revenues that improved by 6.5%, and ADP is projecting 8% to 10% earnings growth for the new fiscal year.
Plus, ADP is rock-solid financially. ADP is one of only four companies in the country whose debt is rated AAA by Standard & Poor’s, so its financial performance and structure is gold-plated. Meanwhile, it sits on $1.7 billion in cash with operating cash flow in excess of $500 million.
52-Week Dividend Increase: 15.5%
52-Week Stock Appreciation: 31%
Dividend Yield: 2%
It’s been a very nice one-year run for candy maker Hershey (HSY), culminating in a sweet 15.5% dividend increase to 48.5 cents just last week, Hershey’s’ 18th consecutive annual improvement to its payout.
As for its screaming stock price, Hershey knows the secret: People really like candy and sweets. Among Hershey’s brands: Its namesake Hershey, Reese’s, Twizzlers and Kit-Kat. Hershey’s 2012 acquisition of Canadaian confectionery Brookside Foods has also helped extend its product reach.
Hershey has made big improvements on both the top and bottom lines over the past half-decade, including doubling its earnings over that time. 2013 looks like another solid year, with its second-quarter results showing a nearly 7% YOY rise in revenues and a 17% improvement in profits. The company also indicated it expects that 7% revenue rise to stay steady throughout the remainder of the year, with net income at a 14% increase for 2013.
Hershey’s yield isn’t anything to scream about, but it’s a nice sweetener on top of what has been nice share appreciation for some time.
52-Week Dividend Increase: 36%
52-Week Stock Appreciation: 29%
Dividend Yield: 2.7%
It’s been quite a ride for Wells Fargo (WFC) since it took a $25 billion bailout from the U.S. Government back in 2008 as part of the Trouble Asset Relief Program.
But for investors, it’s turned out to be a positive one overall.
Like everyone else in the banking sector affected by the housing and mortgage-backed securities meltdown, Wells Fargo went into cleanup and write-down mode while also improving the credit quality of its loan portfolios.
It eventually paid off its TARP loan in December 2009, and now it’s the largest U.S. home lender, originating three out of every 10 home loans, and is the nation’s most valuable bank by market cap at $232 billion.
Despite three straight fiscal years (2010-12) of declining interest income (the banking equivalent of revenues), WFC has squeezed out three straight years of record profits, including nearly $19 billion in 2012. WFC’s recent second-quarter results mirror those of those prior fiscal years: lower revenue on a quarterly year-over-year comparison (down 4%), but improved profits, up almost 20% as it continues to focus on expense margins even as housing prices rise.
Meanwhile, CEO John Strumpf has made it a point to return value to shareholders, increasing Wells Fargo’s dividend twice in the past year — from 22 cents to 25, then to 30, for a total improvement of 36%. The upcoming quarterly payout stands 4 cents away from WFC’s pre-recession dividend. Also, shareholders have gotten nearly 30% in appreciation in the past year, putting WFC shares at all-time highs.
It’s good enough to make Wells Fargo a major holding of Warren Buffett’s Berkshire Hathaway (BRK.B). That should be good enough for you.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he does not hold a position in any of the aforementioned securities.