Dividends are a great investing tool. They can provide a steady stream of capital to reinvest and help match management and shareholders' priorities.
This alignment occurs because many companies pay their CEOs with stock. A robust, supported, and rising dividend encourages that leadership to hold the company's stock long-term. The dividend might reward people for their contribution long after they leave the company.
Smart dividend investors go beyond the company's present yield to elements that indicate a commitment to maintaining and increasing the dividend. These two dividend stocks seem like good options to double up on right now.
NAPA Auto Parts is owned by Genuine Parts (NYSE: GPC). Auto parts are in demand even in poor economies, making that a useful economic niche. Upon reflection, that makes perfect sense. Purchases like cars are pricey. People often choose between repairing their existing car or buying a new one. In hard times, people are more willing to spend a little more to fix their car than to buy a new one.
Genuine Parts has increased dividends for 68 years because to its ability to thrive in adverse times. After a 5% dividend raise, the corporation pays $1 per share per quarter, yielding 2.6%.
Only 41% of its earnings go to dividends. That allows it to keep rising, especially as its operations develop. Genuine Parts may soon join the elite firm with a 70+ year dividend increase streak, as analysts predict its earnings to expand by 7% annually over the next five years.
Not-so-secret real estate titan One of McDonald's (NYSE: MCD) most famous products is burgers. Despite that reputation, smart investors see it as a hamburger-selling real estate magnate. Real estate's stable income flows are important to investors. That's a great trait for a dividend-paying corporation.
McDonald's has raised its dividend for 47 years, most recently by 10%. To avoid losing their dividend growth streak due to a weak year, firms often slow their increases. After over 50 years of hikes, McDonald's strategy is evident in its double-digit increases. Investors get a 2.4% yield and dividend growth potential. With its dividend consuming just over half of its earnings, McDonald's may increase its payout as its earnings grow.
Analysts estimate McDonald's will grow earnings by approximately 7% annually over the next five years. McDonald's long-term dividend raise history, fair payout ratio, and future growth suggest it will continue its streak.
Stay turned for development