If you invest in dividend stocks, you are probably looking for long-term growth to go with the income. Otherwise you might be content to hold one-month U.S. Treasury bills, which yield 4.5% or park your money in an online savings account for a yield close to 4%.
Below is screen of stocks with current dividend yields ranging from 4.14% to 8.46%. What sets these apart from other stocks with high dividend yields is that their payout increases are expected to accelerate in 2023 and 2024 from those in 2022.
On Tuesday, S&P Dow Jones Indices said in a press release that it expected dividend payments by publicly traded U.S. companies to continue to hit record levels in 2023. But Howard Silverblatt, a senior index analyst with the firm, said that the pace of dividend increases in the first quarter had slowed and that he expected this year’s increases to be “at half the pace of the double-digit 2022 growth.”
Silverblatt also said current events in the banking industry were “expected to negatively impact future spending from both consumers and companies, which in turn may curtail corporate dividend growth.”
For many banks, there’s another big item on the table. A focus on share buybacks in recent years is very likely to end — this is a use of cash that can raise earnings per share if the share count is reduced, but there can be consequences, especially after a year of rising interest rates that pushed down the market value of banks’ investments in bonds.
In a note to clients on March 16, Dick Bove, a senior research analyst with Odeon Capital, predicted that stock repurchases in the banking industry would be “meaningfully cut back if not flat out eliminated.” He made three general points about buybacks in the banking industry:
- Buybacks remove working capital that would otherwise provide returns to a bank.
- Buybacks mean a bank’s board of directors is “in favor of flat-out giving capital away to investors that want nothing to do with the bank — they are selling its stock.”
- Buybacks do “nothing to increase bank stock prices – many bank stocks are selling at below their prices of five years ago.”
A company might find it much easier to curtail or stop buying back shares to preserve cash than it is to cut regular dividends. Preserving and increasing the dividend over time has been correlated with good performance for stocks over time. These articles provide examples of how dividend compounding is correlated with long-term growth as income streams build up:
- 14 dividend stocks that rose 100% or more in 5 years as the payouts doubled
- These 15 Dividend Aristocrat stocks have been the best income builders
Dividend stock screen
The S&P Dow Jones Indices report raises the question of which stocks might buck the trend.
Starting with the S&P 500
SPX,
there are 71 companies stocks with current dividend yields of at least 4.00% indicated by annual payout rates. Among these companies, 68 increased dividends during 2022, according to data provided by FactSet.
Then we looked at the pace of dividend increases in 2022 and the consensus estimates for dividends paid during 2023 and 2024, among analysts polled by FactSet. Among the remaining 68 companies, there are 29 for which the estimated 2023 dividend increase is higher than the 2022 dividend increase. Narrowing further, there are 14 for which the estimated 2024 dividend increases are higher than the estimated 2023 dividend increases.
Here are the 14 stocks that passed the screen, sorted by current dividend yield:
| Company | Ticker | Dividend yield | Dividend increase – 2022 | Expected dividend increase in 2023 | Expected dividend increase in 2024 |
| Altria Group Inc. |
MO, |
8.46% | 4.5% | 4.7% | 4.9% |
| Newell Brands Inc. |
NWL, |
7.55% | 0.0% | 0.1% | 0.6% |
| Boston Properties Inc. |
BXP, |
7.42% | 0.0% | 0.7% | 1.0% |
| KeyCorp |
KEY, |
6.99% | 5.3% | 6.7% | 6.8% |
| Prudential Financial Inc. |
PRU, |
6.08% | 4.3% | 4.7% | 4.8% |
| ONEOK Inc. |
OKE, |
5.87% | 0.0% | 2.2% | 2.4% |
| Healthpeak Properties Inc. |
PEAK, |
5.54% | 0.0% | 2.1% | 2.2% |
| Dow Inc. |
DOW, |
5.16% | 0.0% | 1.1% | 2.2% |
| Iron Mountain Inc. |
IRM, |
4.70% | 0.0% | 1.8% | 5.4% |
| NRG Energy Inc. |
NRG, |
4.50% | 7.7% | 7.9% | 7.9% |
| Franklin Resources Inc. |
BEN, |
4.50% | 3.6% | 4.3% | 5.7% |
| Federal Realty Investment Trust |
FRT, |
4.38% | 0.9% | 1.7% | 2.1% |
| Ventas Inc. |
VTR, |
4.26% | 0.0% | 3.3% | 5.5% |
| Kraft Heinz Co. |
KHC, |
4.14% | 0.0% | 0.7% | 0.8% |
| Source: FactSet | |||||
Click on the ticker for more about each company.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
Any stock screen is limited, but can be useful as a starting point or supplement to your own research. If you see any companies of interest, do some research to form your own opinion of how likely they are to remain competitive over the next decade, at least.
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