Published Mon, 11 Nov 2019 14:57:58 on Income Investors
These Dividend Stocks Pay Yields Up to 7.6% (& Growing)
November can mark the beginning of a dark and depressing time of year.
Here in the Northeast, a good chunk of the population now suffers from a mild Vitamin D deficiency. Thanks to the geniuses who invented daylight saving time, the sun sets around 4:30 p.m.
We also just got slammed by the first snowfall of the season. I sent photos to friends down south, and everyone asked why I moved to the Arctic.
But I do love one thing about this time of year: dividend hikes.
Every fall, companies often take the opportunity to reward their shareholders by boosting their distributions. For someone who earns most of their income from dividends, it’s like getting a big pay raise.
Tracking these announcements can also reveal new investment ideas. When executives boost their payouts to shareholders, it signals a large amount of confidence in the future of the business. No wonder dozens of studies have shown that companies that boost their dividends outperform the broader market over the following year.
For this reason, I like to flag dividend stocks that are likely to boost their distributions each month. I give special attention to especially large increases and to reliable dividend-payers that have provided growing dividends for decades or more.
So without further delay, here are three dividend stocks likely to boost their dividend payouts in November. In fact, one of them has already announced a dividend increase for 2020.
Mid-America Apartment Communities
Mid-America Apartment Communities (NYSE: MAA) gives you all the upside of owning rental properties without the hassle of dealing with tenants. The real estate investment trust (REIT) owns more than 100,000 rental units, which generate $1.6 billion in annual rental income. Better still, a professional management team handles all of the day-to-day operations, from fixing toilets to collecting payments.
But here’s where Mid-America stands out. Over the past few decades, management has concentrated most of their purchases in fast-growing cities like Houston, Nashville, and Washington, D.C. This has allowed executives to keep their vacancy rate low while jacking up rents year after year.
For shareholders, this has created a growing stream of dividend income. Mid-America Apartment Communities has boosted its distribution for 25 consecutive years—one of the best track records in the real estate business. Investors have little reason not to expect another five to six percent bump to be announced in November.
Iron Mountain Inc
If you’re like me, then you probably have stacks of documents stored somewhere in your house. Now imagine the paperwork for a bank, law firm, or dental practice. We might live in a digital world, but thanks to a growing number of regulations, companies still need to keep copious paper records of their activities.
The solution? Store everything offsite at an Iron Mountain Inc (NYSE: IRM) facility. Iron Mountain owns hundreds of storage depots worldwide, where businesses pay to stash their paper records and other important assets. And because these sites require little in the way of ongoing maintenance, most of this money flows straight to the company’s bottom line.
This business model has turned Iron Mountain into a cash cow.
Today, IRM shares pay a quarterly distribution of $0.61, which comes out to an annual yield of 7.6%. And each November, management has bumped the distribution to investors. Iron Mountain has already announced that, in January 2020, there will be a slight increase to $0.6185. (Source: “Dividend History” Iron Mountain Inc, last accessed November 11, 2019.)
Nike Inc Nike Inc (NYSE: NKE) pays a so-so one-percent yield. But that’s not because the apparel giant doesn’t care about shareholders. The company’s stock price has soared nine-fold over the past decade, far outpacing management’s string of dividend hikes.
With the business firing on all cylinders, investors can expect those gains to keep rolling in.
Nike continues to gain market share in China, Europe, and the United States. In recent years, management has plowed billions of dollars into expanding its e-commerce business. By selling directly to customers and cutting out the retail middlemen, Nike earns more money on the sale of each item.
All of which should translate into robust financial growth. Through 2025, Wall Street expects Nike to increase its earnings per share at a mid-teen annual clip. One would expect growth like that from a tech start-up, not the world’s largest clothing company. And given Nike’s conservative payout ratio, we can expect management to pass on most of those profits to investors.
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|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|MID-AMERICA APARTMENT COMMUNITIES||128.66||62.2||2.07||3.84||3.00|
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