As firms continue releasing financial results late into the calendar Q1 earnings season, announcements of dividend increases also continue. Some of the latest announcements are particularly notable. This is because several companies that already have high-dividend yield stocks are increasing their quarterly payments even more.
Below are the details on three names with yields between 3% and 9% that recently added more juice to their dividends. All metrics use data as of the May 30 close unless otherwise indicated.
Medtronic’s Industry-Leading Yield Just Got Another Shot in the Arm
First up is a huge player in the healthcare sector, Medtronic (NYSE: MDT). The company is among only six global stocks in the healthcare equipment and supplies industry with a market capitalization of over $100 billion. Medtronic announced on May 21 that it raised its quarterly dividend to 71 cents per ordinary share. This equates to an annual dividend of $2.84 per ordinary share. The next quarterly dividend will be payable on July 11 to shareholders of record at the close of business on June 27. Despite being just a 4-cent per share annual dividend increase, Medtronic has a strong yield and track record of lifting its dividend.
The increase marks Medtronic's 48th consecutive year of dividend increases. The company’s dividend yield going forward now sits at just over 3.4%, a very solid figure. This is especially true as the yield is far and away the highest among the six stocks in Medtronic’s industry mentioned above.
The next highest yield comes from Abbott Laboratories (NYSE: ABT) at around 1.8%. Medtronic’s yield also ranks in the top five among stocks in its industry with a market capitalization of over $10 billion. The company also achieved net share repurchases worth around $2.7 billion over the last 12 months.
3% Dividend Increase Gets Flowers Foods on the Verge of a 6% Yield
Flowers Foods (NYSE: FLO) is a much smaller company than Medtronic; however, its dividend yield is just the opposite. The approximately $3.6 billion firm is a huge producer of packaged baked goods and bread. It owns brands like Wonder Bread, Nature’s Own, and Dave's Killer Bread. On May 22, the company announced a 3.1% increase to its quarterly dividend, boosting the payout to 25 cents per share.
This equals an annual dividend payment of 99 cents. The next quarterly dividend is payable on June 19 to shareholders of record on June 5. This dividend increase now puts the firm’s yield at a hefty 5.8%. This yield ranks among the top five highest when looking at U.S. consumer staples stocks worth over $3 billion.
LYB: Massive +9% Yield With +10% Upside Potential
Last up is LyondellBasell Industries (NYSE: LYB). This basic materials company produces a wide range of chemicals, primarily those used in manufacturing plastics. It also makes chemicals that improve gasoline combustion and engineered plastics for things like automotive parts. On May 23, the company announced a 2.2% increase to its quarterly dividend, which moves to $1.37 per share. The company will pay the dividend to shareholders on June 9, with a record date of June 2.
LyondellBasell has increased its dividend for 15 years in a row. In addition, the stock now has a whopping indicated dividend yield of 9.7%. This ranks as the second highest among all stocks in the S&P 500 Index. Only Dow (NYSE: DOW), another chemical company, has a slightly higher yield at 10.1%. Both of these stocks have faced severe drawdowns in the recent past, which is a significant reason for their currently very high yields. Over the past 52 weeks, Dow has had a total return of around -47%. For LYB, the number comes in at -38%.
However, recent analyst price targets indicate that LYB is somewhat undervalued, or at least not overvalued. Among updates tracked by MarketBeat since the company’s latest earnings release on Apr. 25, the average price target is just under $63. This implies an 11% upside in shares compared to the stock’s May 30 closing price. Combined with the stock’s high dividend yield, achieving this price target would create a very solid return of around 20%. Still, achieving this appreciation in shares is anything but certain.
These stocks have some of the highest dividend yields in their respective industries, aided by these recent increases. LyondellBasell Industries stands out in particular for having one of the highest yields in the market and its potential for moderate upside.
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