We’ve spotted five dividend stocks with great payouts in the coming month. But these companies aren’t just paying run-of-the-mill dividends. These stocks consistently pay investors more. That is, they have a history of consecutive dividend increases.
Why do we care so much about stocks with a history of upping dividend payments quarter after quarter? Because they simply tend to outperform all other stocks.
Consider this: The SPDR S&P Dividend ETF (NYSE: SDY), which tracks U.S. stocks that have been consistently increasing their dividends every year for at least 25 consecutive years, has grossly outperformed the market for the last decade.
Shares of the SDY ETF are up 117% on a total return basis (which includes dividends) for the last 10 years, while the S&P 500 is up just 62% over the same period. It pays to focus on consistent dividend payers.
With that in mind, here are the best among July dividend increases:
July Dividend Increases: Cracker Barrel Old Country Store (NASDAQ: CBRL)
Cracker Barrel has performed well in an industry that has been struggling of late. Its hybrid model, which combines a restaurant and country “variety” store in one, has allowed Cracker Barrel to generate above-average profit margins and returns on invested capital. It’s money that it’s now returning to shareholders.
Cracker Barrel pays a 2.9% dividend yield, but this restaurant company is a special case. For the past few years it’s been paying a one-time special dividend during the month of July. This year it’s offering a $3.50-per-share special dividend, an 8% increase from last year’s special dividend.
Cracker Barrel is also upping its regular quarterly dividend by 4% to $1.20 a share. It’s now increased its dividend for seven straight years. In total, Cracker Barrel shareholders will be paid $4.70 a share in dividends this month, an effective dividend yield of close to 5%.
Shares trade ex-dividend July 12.
July Dividend Increases: Clorox (NYSE: CLX)
Clorox pays a solid 2.5% dividend yield. That’s backed by a 39-year streak of consecutive dividend increases. The consumer staples company is increasing its quarterly dividend by 5% this month to $0.84 a share.
Driving this type of consistent dividend growth is its portfolio of ubiquitous brands. Most households have at least one of Clorox’s products at hand. Clorox, known for its namesake Clorox brand, makes a variety of products across the consumer staples space. It owns valuable brands like Fresh Step, Brita, Kingsford Charcoal and Hidden Valley. The company wants to cater to more health-conscious customers and trends with new products. It is also expanding into higher-margin professional products.
Shares trade ex-dividend July 17.
July Dividend Increases: Darden Restaurants (NYSE: DRI)
Darden is the owner of Olive Garden and Longhorn Steakhouse and pays a 2.4% dividend yield. It’s upping its quarterly dividend to $0.63 a share, which is a 13% increase. This is another restaurant name on our list, but another one that’s found a way to outperform the competition.
Darden started its turnaround, which included selling off the Red Lobster brand a few years ago and changing its Olive Garden menu and store setup, and hasn’t looked back. It’s refocused its brand portfolio entirely. Darden recently bought Cheddar’s Scratch Kitchen. Meanwhile, even with shares up 40% in the last year, it’s still trading at just 21 times next year’s earnings estimates, which is a discount to the likes of Texas Roadhouse (NASDAQ: TXRH).
Shares trade ex-dividend July 6.
July Dividend Increases: Lowe’s Companies (NYSE: LOW)
Lowe’s is upping its quarterly dividend an impressive 12% this month to $0.41 a share. The company now offers a 2.15% dividend yield. Lowe’s has a 54-year streak of consecutive annual dividend increase, and it’s still paying out just 35% of its earnings via dividends.
Despite weakness in the retail industry, the home-improvement space is holding up nicely. Lowe’s shares have been a little weak recently. That is related to rising interest rates – which may lead to a decline in housing demand – but for investors, it has created a buying opportunity. The company has a large economic moat, which includes its large scale, IT network and supply chain. Its expansion into Mexico and Canada should offer some interim growth opportunities.
Shares trade ex-dividend July 24.
July Dividend Increases: Casey’s General Stores (NASDAQ: CASY)
Casey’s is the lowest dividend yield on our list, coming in at 1%, but it also might be the most underrated as well. This $4.2 billion market-cap operator of convenience stores has upped its annual dividend for 14 straight years. It’s increasing its quarterly dividend by a couple percent to $0.26 a share. The Casey’s dividend is just a 23% payout of earnings.
Shares of Casey’s have fallen 15% in the last year largely due to a recent weak earnings report. But the convenience store operator appears to be well-positioned for growth. For one, it still has a lot of potential to add stores. It just opened its first store in Ohio and is already building over 100 new locations. Its stores also have built-in restaurants. That business provides higher margins and returns on capital compared to other convenience stores.
Shares trade ex-dividend July 28.