- Home Depot (HD): The company’s PRO business is accelerating
- Danaher (DHR): Grew its free cash flow in 2021 by 31%
- American Express (AXP): Amex boosted its forecast for 2022
- Prologis (PLD): Continues to grow its energy business
- Occidental Petroleum (OXY): Warren Buffett’s buying more
- Dollar General (DG): Slow and steady wins the race
- Steel Dynamics (STLD): It’s giving Nucor a run for its money
The Financial Times reported in February that global dividend growth is set to stall in 2022. Therefore, if you’re looking for dividend stocks to buy that are boosting their payouts, you might have a tough time finding possible options.
“Global dividends hit a record $1.47tn last year, staging a full recovery from the sharp cuts to payouts during the worst of the Covid-19 pandemic, according to the Janus Henderson report,” Financial Times reported.
“Total corporate payouts to shareholders rebounded in 2021 from the depressed levels recorded the year before, when many companies held onto their cash to weather the initial economic impact of the Covid-19 pandemic, according to the report.”
In 2021, dividends paid out rose 17% worldwide. However, in North America, they were up just 4.1%. In 2022, the Janus Henderson report expects dividend payouts to increase by just 3%.
The seven names on this list are all great companies. However, it is their latest dividend increases that ought to have income investors interested in checking them out more closely in the weeks ahead.
Dividend Stocks to Buy: Home Depot (HD)
When Home Depot (NYSE:HD) announced its Q4 2021 results in February, it also announced a 15% increase in its quarterly dividend to $1.90 with the March payout. The annual rate of $7.60 yields a reasonable 2.4%.
When dividends go up by double digits it’s usually because earnings are also moving in the right direction. In the fourth quarter, the company’s earnings per share were 21.1% higher than Q4 2020. For all of 2021, EPS rose 30.1%.
As Chief Operating Officer Ted Decker stated in the Q4 2021 conference call, PRO sales growth outpaced DIY in the quarter. Both segments experienced accelerated growth from the third quarter. Transactions of more than $1,000 were 18% higher than Q4 2020. HD remains in the driver’s seat.
The healthcare company reported its Q4 2021 results at the end of January. Its adjusted EPS were $2.69, 19 cents higher than the consensus estimate, and 29.3% higher than Q4 2021. For all of 2021, it had adjusted EPS of $10.05, 59.3% higher than in 2020.
The company’s sales in the fourth quarter for both its Life Sciences and Diagnostic segments increased by more than 20%. For all of 2021, its sales rose by 32.2% to $29.5 billion.
In 2021, the company increased its free cash flow (FCF) by 30.5% to $7.08 billion from $5.43 billion. That’s a healthy 24% of its top-line sales.
Dividend Stocks to Buy: American Express (AXP)
Financial services company American Express (NYSE:AXP) announced at the end of January that it would increase its quarterly dividend by 20% to 52 cents from 43 cents. The annual payout of $2.08 yields a reasonable 1.12%.
At the same time, it increased its dividend, it also reported its Q4 2021 results. As part of the report, it raised its forecast in 2022 for both sales and earnings. It now expects revenue to grow 19% year-over-year at the midpoint of its guidance while EPS should be $9.45 at the midpoint, up from $9.05 previously.
In the years ahead, Amex plans to grow annual revenue by at least 10% and earnings by 15%. “Our investment strategy enabled us to reach record levels of Card Member spending, maintain customer retention and … deepen our digital engagement with customers,” Barron’s reported CEO Stephen Squeri said in a statement.
AXP stock is up more than 12% year-to-date.
As if Prologis (NYSE:PLD) doesn’t own enough warehouses already, the California-based real estate investment trust is rumored to have bid $23 billion for Mileway, Blackstone’s (NYSE:BX) European warehouse and logistics business.
Acquisitions have been a big part of the REIT’s growth in recent years as it has ridden the e-commerce wave. The company now has more than $215 billion in assets under management with more than one billion square feet on four continents.
However, the most exciting part of its business might be its energy business. Prologis Energy is now the third-largest private solar provider in the U.S.
In February, the REIT’s board approved a 25% increase in its quarterly dividend. With the March 2022 payment, investors will now receive 79 cents. Its annualized payout of $3.16 yields 2.0%.
“It is [dividend] underpinned by strong organic growth from same store NOI and Strategic Capital earnings, as well as our unique ability to source profitable deployment opportunities globally — all of which position us for an extended period of durable earnings growth,” said Thomas S. Olinger, chief financial officer, Prologis.
Dividend Stocks to Buy: Occidental Petroleum (OXY)
Boy, have times changed for oil and gas company Occidental Petroleum (NYSE:OXY). In 2020, it was hanging on by a thread. Warren Buffett was worried he may have made a really dumb move backing the company in its acquisition of Anadarko.
With oil prices way above $100, the cash is flowing and Buffett is buying more OXY stock. Right now, he owns 7.2 billion of OXY. However, he has warrants to exercise stock at 84 million shares that would give Berkshire Hathaway (NYSE:BRK.B) 22% of its stock.
Remember, Buffett won’t pay dividends, but he loves collecting them.
Feb. 24, Occidental announced that it was increasing its dividend to 13 cents a share from one cent previously. That’s a 1,200% increase. For Buffett, should he exercise all those warrants, he’ll be collecting $115 million in dividends on his investment. He would now be getting paid to wait for OXY to head to $100. It last traded above $100 in 2014.
He’s not the fifth wealthiest person in the world for nothing.
Dollar General (DG)
Discount store Dollar General (DG) announced its Q4 2021 results on March 17. Included in the announcement was a 31% increase in the dividend to 55 cents with the April payment. The annual payment of $2.20 yields 1.0%.
This might not seem like much, but I’ve always said that it’s not the yield that matters, but the increase. Despite the company missing on revenues, gross margin, operating margin and same-store sales growth in the fourth quarter, the business is still quite healthy.
Dollar General’s FCF in fiscal 2022 was $1.80 billion, down from $2.85 billion in 2021. However, it was the second-highest FCF in its history. That’s got to count for something.
In 2022, it expects revenue growth of 10%, 2.5% same-store sales growth, and 13% EPS growth at the midpoint of its guidance.
Down 5.9% YTD, now is the time to take advantage of Dollar General’s lull in the action.
Dividend Stocks to Buy: Steel Dynamics (STLD)
The steel producer announced on Feb. 28 that it would increase its quarterly dividend by 31% to 34 cents a share. The annual rate of $1.36 yields a reasonable 1.6%. In addition, the company announced a new $1.25 billion share repurchase program to go along with the $92 million remaining on the current one.
Steel Dynamics stock is up more than 43% YTD. That’s more than 800 basis points better than Nucor. It’s definitely on fire.
On March 16, Steel Dynamics updated its Q1 2022 guidance. It expects an adjusted EPS of $5.87 at the midpoint of its guidance. They were $5.78 in Q4 2021.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.