3 Stocks Offering Steady Retirement Income

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Dow dividend stocksGenerating a steady diet of annual double-digit growth in dividends is hard work, and it doesn’t happen often.

According to Dividend Growth Investor, 107 companies managed to up their dividends by at least 12% annually over the past decade, and that number significantly shrinks — to 28 stocks — if you stretch that out to 25 years.

There’s any number of reasons why companies slow their dividend roll, of course, but one of the most frequent reasons is pretty simple to identify — earnings growth slows, and thus the safety blanket for those big increases gets a little smaller and closer to the ground.

Thus, as we work toward retirement, it would behoove us to look for companies that not only have a good history of dividend increases, but also companies that have a very positive outlook on the earnings front — that way, we can have a bit more confidence that future payout hikes will remain robust.

Here, we look at three stocks that have grown dividends by double digits for at least five years — and thus put a bit of a premium on rewarding shareholders — and are projected to grow earnings per share by at least 10% annually over the next five years:

Qualcomm

qualcomm qcom stock5-Year Dividend Growth Rate: 17.5%
5-Year Expected EPS Growth Rate: 16.7%

With a leading role in the mobile devices market, Qualcomm (QCOM) continues to churn out higher revenues and earnings, with fiscal 2012 revenues up 28% year-over-year to $19 billion and earnings 43% better at $6 billion.

Mobile is everything in computing today, and its growth is all but guaranteed to continue unabated into the near future, so I wouldn’t look for Qualcomm to lose any momentum heading into the next five-year stretch. QCOM’s most recent second-quarter report showed revenue ahead 35% compared to last year, and net income is ahead 30% — a nice foot forward.

QCOM’s dividend growth rate is a bit skewed by its most recent bump from 25 cents to 35 cents per year, but that’s no reason to expect Qualcomm to tighten the dividend spigot any time soon.

Home Depot

Home Depot HD5-Year Dividend Growth Rate: 12.6%
5-Year Expected EPS Growth Rate: 15.6%

Home Depot (HD) has taken full advantage of the recovering housing market to accelerate its growth on the top and bottom lines, particularly over the past three year housing recovery to accelerate its growth on both the top and bottom lines, particularly during the past three-year stretch.

The 2,200-store mega-retailer has kept up its momentum heading into fiscal 2014, generating record quarterly revenue for the second quarter of $22.5 billion compared to $20.6 billion last year, while net income rose just under 18% over the same comparable period.

HD rewarded shareholders with a sweet 34% dividend increase between 2012 and 2013, raising it to 39 cents per share quarterly. Meanwhile, analysts see double-digit growth in the next half-decade, which should power more hikes down the road.

United Technologies

United Technologies UTX5-Year Dividend Growth Rate: 13.3%
5-Year Expected EPS Growth Rate: 13.7%

United Technologies (UTX) is a veritable “who’s who” of product names, from Otis elevators to Carrier air conditioners to Sikorsky helicopters. As a broadly diversified multinational operation, UTX is offered some safety against big hits to any one business segment.

United Technologies hasn’t been knocking revenues out of the park lately, and in 2012 UTX’s net income came in lower thanks in part to $590 million in restructuring charges, including changes to its pension plan.

However, UTX is back on track for 2013, with Q2 revenues up 16% to $16 billion, and earnings up 6% to $1.55 billion. And analysts expect much better growth down the road, with profits expected to grow roughly 14% annually for the next half-decade. That should help UTX improve significantly upon its current 54-cent quarterly payout.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2013/09/3-stocks-for-steady-income-in-retirement-utx-hd-qcom/.

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