I’m sure you’ve noticed 2014 has gotten off to a rough and rocky start. Stocks across the board have traded mostly down. The Wilshire 5000 Total Market Index has sagged 4.5% year to date – a palpable reversal from the 30% upward thrust in 2013.
Now I did say “mostly” down, not all down. A few stocks have bucked the trend to keep the good times rolling through the turbulent nascent days of 2014. Within the minority, three dividend paying stocks – dividend growers to be specific – look poised to build on gains achieved in 2013 and early 2014.
Audio and electronics manufacturer Harman International Industries (NYSE: HAR) is one of those dividend growers.
In 2013, Harman’s share price rose 80%. Over the past month, shares have tacked on another 24%.
Harman’s share price is being fueled by strong earnings and revenue trends, which are likely to continue through 2014. A few days ago, management raised fiscal-year 2014 EPS guidance to $4.16 from the original projection of $3.85. Revenue is expected to post at $5.1 billion compared to an earlier forecast of $4.7 billion.
The good news for income investors is Harman has the financial wherewithal to grow the dividend at the same pace as share-price appreciation. The company can boast of $7.55 in cash per share.
Harman is willing to return more cash to shareholders. The quarterly dividend payment has increased tenfold – to $0.30 per share from $0.03 – since early 2011. Over the past three years, the dividend, on average, has doubled. I can’t say another doubling is in the cards, but an increase is forthcoming, and anything less than a 25%-increase would be a disappointment.
Anyone who bet Wynn Resorts (NASDAQ: WYNN) would outpace the market in 2013 is holding a winning ticket. The large Las Vegas and Macau casino operator saw its share price rise 60% in 2013. Wynn investors were further rewarded with a 100% increase in the annual dividend payment – to $4 per share from $2 – as well as a special $3 per share dividend.
So far this year, shares of this dividend paying stock are up 10%.
Impressive growth is powering Wynn’s share price and dividend growth. For the fourth quarter, Wynn posted a 17.9% year-over-year increase in quarterly revenue to $1.52 billion. Over the same quarter, net income nearly doubled to $213.9 million, or to $2.10 per share.
Sales at its Macau properties, Wynn’s largest market, have been particularly robust, rising 25% to $1.12 billion in the quarter. Management said in a recent conference call that growth in Macau will be just as good, if not better, in 2014.
Like its share price, Wynn’s dividend has gotten off to a good start in 2014. The company recently hiked the quarterly payout to $1.25 – a 25% increase.
Don’t be put off by negative news. I’m not, which is why I like Royal Caribbean Cruises (NYSE: RCL). A week ago, an illness outbreak on one of its ships affected 600 of the 3,500 passengers. The crew handled the outbreak professionally and courteously. The impact to future growth is negligible.
Growth in Royal Caribbean’s share price is anything but negligible. In 2013, Royal Caribbean’s shares were up over 40%. In 2014, Royal Caribbean shares are up an additional 2%.
An increase in both cruise traffic and casino activity is driving earnings growth. In the latest quarter, Royal Caribbean reported EPS of $0.23, beating the consensus estimate by $0.05. Divining the future, management updated guidance, with EPS ranging between $0.20 and S0.30 for the first quarter. For the year, management expects EPS to range between $3.20 and $3.40, which is meaningfully higher than the $2.14 posted for all of 2013.
Since 2011, Royal Caribbean has increased its quarterly dividend 150%, to $0.25 a share from $0.10. Given robust earnings expectations for 2014, Royal Caribbean is capable of funding a 20% dividend increase for 2014.
If share price follows dividend growth, as it frequently does, Harman, Wynn, and Royal Caribbean investors could see an encore performance of 2013 returns.
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