By Nancy Zambell, Chief Analyst, Wall Street’s Best Investments
There have been very few companies increasing their dividends of late. On the contrary, many Companies have been slashing their dividend payouts in recent months.
The following is a list of companies in the S&P 500 that slashed their dividends between last November and this July. As you’ll see, many of them are in industries that have been decimated by COVID-19. Some of the cuts were pretty hefty.
Recent Dividend Cuts
- Wells Fargo (WFC), $0.31 to $0.10
- Schlumberger (SLB), $0.50 to $0.125
- Occidental Petroleum (OXY), $0.79 to $0.11.
- Apache (APA), $0.25 to $0.025
- Targa Resources (TRGP), $0.91 to $0.10
- DCP Midstream (DCP), $0.78 to $0.39
Here are some of the best-known companies that have suspended their dividends:
- Dick’s Sporting Goods (DKS)
- Estee Lauder (EL)
- Gap (GPS)
- Carnival (CCL)
- Goodyear Tire & Rubber (GT)
- Las Vegas Sands (LVS)
- Boeing (BA)
- Marriott International (MAR)
- Ford (F)
- Delta Air Lines (DAL)
- Freeport McMoRan (FCX)
- Darden Restaurants (DRI)
- Bloomin’ Brands (BLMN)
- BJ’s Restaurants (BJRL)
- Macy’s (M)
- Nordstrom (JWN)
- Sabre (SABR)
As you can see, these companies operate primarily in the energy, airlines, restaurant, and retail arenas. Since then, scores of other companies have cut or suspended their dividends.
5 Companies Increasing Their Dividends
The good news is, some companies are now increasing their payouts, including:
- Toronto-Dominion Bank (TD), from $0.57 to $0.59
- Intuit (INTU), from $0.53 to $0.59
- Dick’s Sporting Goods (DKS), brought back its dividend, $0.31
- Lowe’s Companies (LOW), from $0.55 to $0.60
- Algonquin Power (AQN), from $0.16 to $0.31
There are plenty more companies that are raising or reinstating their dividends. But, just as a dividend cut doesn’t necessarily mean you should sell your stock, an increase in the payout also doesn’t mean the company is a great buy.
With that in mind, I thought I would take a brief look at the five companies I’ve listed that have recently raised their dividends, to see if they look like attractive investments.
Here’s what I found.
- Toronto-Dominion Bank (TD): 10.5 P/E, rising earnings estimates, 5% dividend yield
- Intuit (INTU): 47.4 P/E, rising earnings estimates, 0.7% dividend yield
- Dick’s Sporting Goods (DKS): 18.0 P/E, rising earnings estimates, 2.3% dividend yield
- Lowe’s Companies (LOW): 20.7 P/E, rising earnings estimates, 1.5% dividend yield
- Algonquin Power (AQN): 14.3 P/E, 4.5% dividend yield
All but Algonquin look fundamentally and technically attractive. And as earnings generally drive stock prices, the first four companies look interesting.
Financial stocks have had a rough road this year, down on average 13.8%, so I might be a bit wary about diving into that sector just yet. Technology stocks, of course, have been the best-performing sector, so Intuit is worth a look. Surprisingly, Consumer Discretionary stocks have also done well, the third-best-performing sector.
Of course, the do-it-yourself, as well as the housing markets, continue to thrive, so Lowe’s looks good, and is trading at an undervalued level. Utility stocks have lost an average of 8.1% in 2020, and Algonquin stock hasn’t done much. I would stay out of it at this time.
These are just a few ideas for you. But as always, they are just a point of reference to begin your research to see if they might fit into your portfolio strategy and goals.