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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Stocks Increasing Dividend Payouts Ahead of Interest Rate Cuts

Tweezers with gold nugget above pile on grey table, closeup

Most investors focus on Wall Street analyst forecasts and economist opinions to determine what to do with their liquid capital. While this is a good place to start and consider when doing their own due diligence, other factors should be taken into consideration when connecting the dots and understanding where the economy might be headed next.

This factor is management activity. Whether it is share buybacks, insider transactions, or, more particularly, dividend payout increases, investors can gain massive insights by following management activity. Recently, three stocks have announced dividend payout increases, and timing these increases might signal that management wanted to offer investors a better dividend yield before these stocks go on a potential rally after interest rate cuts.

This list of pre-runners includes AngloGold Ashanti Inc. (NYSE: AU), as most of the market now knows that dollar weakness could send dollar-quoted commodities like gold into newer highs, which is good for miners like AngloGold. Rate cuts can also positively affect the consumer discretionary sector, justifying Simon Property Group Inc. (NYSE: SPG) 's dividend boost. Joining the party for gold miners is Hecla Mining (NYSE: HL), which also boosts dividends.

Gold's New Highs and the 2 Stocks Getting a Boost from It

Realizing that currency values are significantly driven by interest rate trends, traders and management should shift their views ahead of the potential interest rate cuts coming to the United States dollar today.

According to the CME’s FedWatch tool, these cuts might be here as soon as September 2024, giving everyone a deadline to position opinions—and capital—accordingly. The scheme for lower rates has driven the dollar index to a seven-month low now while sending gold prices to new all-time highs.

Further weakness in the dollar could send gold into Goldman Sachs’ targets for $2,700 an ounce this year. Remembering that gold is a dollar-quoted commodity (like oil) is key for investors trying to navigate the bullish views forming around these two miners.

Subtle Signs Point to Deeper Opportunities for AngloGold Stock

This stock boosted its dividend to $0.22 a share, but this is still only a 0.7% annualized dividend yield. This is nothing to write home about, but the rest of the market should pay attention to why management chose to do this right before the rate cuts.

Wall Street analysts now forecast up to 26.4% earnings per share (EPS) growth for the company's next 12 months, leading to other technical factors showing further upside ahead. AngloGold stock's short interest declined by 12.9% in the past month, a sign of bearish capitulation.

As bears leave the scene, institutional investors come to take their place. The main player in this list is Oaktree Fund Advisors, which boosted its position by as much as 10.5% as of August 2024. This boost would net their investment at $17.2 million today, another vote of confidence.

Hecla Mining Stock: A Reliable Growth Play for Investors

It is one thing to see Wall Street forecast double-digit EPS growth from one metals miner. Still, a coincidence is far from reality now that up to 140% EPS growth is expected from Hecla mining this year. Management also boosted dividends for this stock, but they were as unimpressive as AngloGold’s.

Paying out $0.05 a share to investors would translate into a 0.8% dividend yield. Then again, the intention and timing behind the slight boost is what matters most here. Analysts at HC Wainwright think this stock could be worth up to $10.25 a share, daring it to rally by 65.5% from where it trades today.

Like its peer AngloGold, Hecla Mining drove bears away as the stock’s short interest collapsed by 19.3% in the past month alone. This left some room for B. Riley Wealth Advisors to up their position by 4.9% as of August 2024 for a net investment of $5.9 million.

Simon Property Group Stock: An Unlikely Income Bet with Upside Potential

Most people argue that mall centers and in-person shopping are a thing of the past, just like in-person work driving commercial property valuations lower due to falling rental income. Michael Burry would disagree.

He recently bought stock in Hudson Pacific Properties Inc. (NYSE: HPP) as a bet that these properties will retain their value or even go higher soon. Investors should consider this view along with management’s decision to boost Simon Property’s dividend to $8.0 a share or an annual dividend yield of 4.8% today.

The best part about the potential upside in this real estate investment trust (REIT) is that only a few investors know it. The few pieces of evidence point to HSBC Holdings boosting its position in this stock by 6.7% as of August 2024, for a net investment of up to $162.7 million today.

As rate cuts become more likely and consumer activity ramps up to offer Simon Property tenants more upside, investors can find more reasons to consider this company.

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