Looking for Dividend Hikes from GE, Microsoft, McDonald's
With U.S. treasuries paying out so little, investors are increasingly turning to dividends as an alternative. General Electric (NYSE: GE), Lockheed Martin (NYSE: LMT), McDonald's (NYSE: MCD), Microsoft (NASDAQ: MSFT), Verizon Communications (NYSE: VZ) and Yum! Brands (NYSE: YUM) are just a few of the companies that may be overdue for a boost to their dividends.
GE has paid out $0.17 for three consecutive quarters. This represents a yield of about 3.2 percent, and compares to a dividend of $0.31 back before the recession. The Fairfield, Connecticut-based Dow Jones Industrial component has a market capitalization near $221 billion. Long-term debt has been shrinking in recent quarters. GE's price-to-earnings (P/E) ratio is higher than the industry average, and its long-term earnings per share (EPS) growth forecast is almost 13 percent. The mean price target of analysts is more than 7 percent higher than the current share price, which is near the 52-week high.
Despite the risk of austerity measures in the defense sector, Lockheed Martin is still expected to grow earnings. Its $1.00 quarterly payment could rise to $1.10 or $1.15 in the next 60 days. The share price reached a 52-week high Tuesday, and the dividend yield is near 4.4 percent. This aerospace and security company is an S&P 500 component with a market cap around $30 billion. Its return on equity is more than 102 percent, and the P/E ratio is less than the industry average. The company announced this week that it will build the spacecraft for NASA's next mission to Mars.
The dividend here has been raised every year since 1976, but has not been bumped up from $0.70 in the past three quarters. The fast-food giant's market cap is more than $89 billion, and this S&P 500 component has a dividend yield of about 3.2 percent. The operating margin is much higher than industry average, and the return on equity is about 38 percent. The mean target price is more than 10 percent higher than the current share price, but the share price is down more than 10 percent year to date. Sixteen out of 29 analysts surveyed by Thomson/First Call recommend buying shares.
The quarterly payout has been $0.20 for the past four quarters and a boost in the dividend could be announced as soon as September. Microsoft's dividend yield is currently about 2.5 percent, higher than competitors such as Apple (NASDAQ: AAPL) and Oracle (NASDAQ: ORCL). This Redmond, Washington-based software giant is an S&P 500 component as well, and it has a market cap near $258 billion. Of 38 analysts polled who follow the stock, 27 rate the shares at Buy or Strong Buy. Their mean price target is about 14 percent higher than the current share price, as well as higher than the 52-week high.
With the impending release of the iPhone 5, now would seem to be a good time for Verizon or competitor AT&T (NYSE: T) to announce a dividend hike. Verizon has raised its dividend in early September in each of the past two years. It is a Dow Jones Industrial component with a market cap of more than $122 billion and a dividend yield of about 4.5 percent. Long-term debt has declined more than 7 percent in the past three quarters. However, only 15 out of 40 analysts surveyed recommend buying shares. The shares have pulled back about 7 percent from a multiyear high back in July.
The operator of the Pizza Hut and Taco Bell fast-food chains has increased its dividend each year at a double-digit percentage rate since initiating a dividend in 2004. The previous dividend hike was in September 2011. The dividend yield is about 1.6 percent. Louisville, Kentucky-based Yum! Brands is an S&P 500 component and has a market cap of almost $30 billion. Its long-term EPS growth forecast is more than 13 percent. The mean price target of analysts is more than 14 percent higher than the current share price, and also higher than the 52-week high.
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