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Seven companies expected to grow dividends in 2013

January 07, 2013 | About:
Over the past year, many companies kept increasing dividends. Payouts are expected to reach a record amount in 2012. Despite fears of fiscal cliff, the US economy is doing ok, and corporate profits are also doing well. In a previous article I outlined why I am not worried about the fiscal cliff. Strong profits lead to stable and growing dividend checks. As a result, I expect companies in general to be able to distribute a record amount of cash to shareholders in 2013.

In this article, I have outlined several companies which I expect to reward their shareholders with the gift of dividend growth. Several of these companies have managed to boost distributions for over half a century each. These companies have consistently paid and raised distributions during situations where the top marginal tax rates exceeded 70%. Companies that follow such managed dividend policies are much more likely to keep boosting dividends, especially when their financial conditions are improving.

Johnson & Johnson (NYSE:JNJ), together with its subsidiaries, engages in the research and development, manufacture, and sale of various products in the health care field worldwide. In 2012 the company raised quarterly dividends by 7%, to 61 cents/share, marking the 50th consecutive annual dividend increase. The five year average dividend growth is 9.10%/annually. Earnings per share are expected to increase to $5.09 in 2012 and $5.49 in 2013. I expect quarterly dividends to increase to 65 – 66 cents/share in 2013. Currently, the stock is attractively valued at 14.30 times earnings and yields 3.50%. Check my analysis of the stock for more information.

The Coca-Cola Company (NYSE:KO), a beverage company, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. In 2012 the company raised quarterly dividends by 8.50%, to 25.50 cents/share, marking the 50th consecutive annual dividend increase. The five year average dividend growth is 8.70%/annually. Earnings per share are expected to increase to $2 in 2012 and $2.19 in 2013. I expect quarterly dividends to increase to 27 - 27.5 cents/share in 2013. Currently, the stock is attractively valued at 18.90 times earnings and yields 2.80%. Check my analysis of the stock for more information.

McDonald’s Corporation (NYSE:MCD) franchises and operates McDonald's restaurants in the global restaurant industry. In 2012 the company raised quarterly dividends by 10%, to 77 cents/share, marking the 36th consecutive annual dividend increase. The five year average dividend growth is 20.40%/annually. Earnings per share are expected to increase to $5.31 in 2012 and $5.78 in 2013. I expect quarterly dividends to increase to 85 – 86 cents/share in 2013. Currently, the stock is attractively valued at 16.60 times earnings and yields 3.50%. Check my analysis of the stock for more information.

The Procter & Gamble Company (NYSE:PG), together with its subsidiaries, engages in the manufacture and sale of a range of branded consumer packaged goods. In 2012 the company raised quarterly dividends by 7%, to 56.20 cents/share, marking the 56th consecutive annual dividend increase. The five year average dividend growth is 11.20%/annually. Earnings per share are expected to increase to $3.96 in 2013 and $4.30 in 2014. I expect quarterly dividends to increase to 60 – 61 cents/share in 2013. Currently, the stock is attractively valued at 18.90 times earnings and yields 3.30%. Check my analysis of the stock for more information.

Philip Morris International Inc. (NYSE:PM), through its subsidiaries, manufactures and sells cigarettes and other tobacco products. In 2012 the company raised quarterly dividends by 10.40%, to 85 cents/share, marking the 5th consecutive annual dividend increase. The five year average dividend growth is 13.20%. Earnings per share are expected to increase to $5.21 in 2012 and $5.81 in 2013. I expect quarterly dividends to increase to 95 – 96 cents/share in 2013. Currently, the stock is attractively valued at 16.70 times earnings and yields 4.10%. Check my analysis of the stock for more information.

Chevron Corporation (NYSE:CVX), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. In 2012 the company raised quarterly dividends by 11.10%, to 90 cents/share, marking the 25th consecutive annual dividend increase. The five year average dividend growth is 9 %/annually. Earnings per share are expected to reach $12.55 in 2012 and $12.18 in 2013. I expect quarterly dividends to increase to $1/share in 2013. Currently, the stock is attractively valued at 8.80 times earnings and yields 3.30. Check my analysis of the stock for more information.

United Technologies Corporation (NYSE:UTX) provides technology products and services to the building systems and aerospace industries worldwide. In 2012 the company raised quarterly dividends by 11.50%, to 53.50 cents/share, marking the 19th consecutive annual dividend increase. The five year average dividend growth is 12.70%/annually. Earnings per share are expected to increase to $5.32in 2012 and $6.06 in 2013. I expect dividends to increase to 59 – 60 cents/share in 2013. The company typically raises distributions every five quarters. Currently, the stock is attractively valued at 16.80 times earnings and yields 2.60%. Check my analysis of the stock for more information.

Full Disclosure: Long JNJ, KO, MCD, PG, PM, CVX, UTX

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