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These are the 3 most interesting companies that have recently raised their dividend

Mart Poom
19. 5. 2023
8 min read

Raising the dividend is a good signal to investors that companies are doing well and want to share their success with their shareholders. In the following article, we look at three stocks that have recently increased their dividends. How much has the dividend increased? How are they doing? And will the dividend continue to grow?

A (reasonable) dividend increase is usually a good sign. It indicates steady and healthy growth for a company that no longer needs to reinvest all of its profits back into its growth. Instead, it can start returning some of its profits to its shareholders in the form of higher dividends. This suggests that the company should have sufficient sustainable sources of growth in the future.

Dividend investors like regular cash flow in the form of quarterly or semi-annual dividend payments. Increasing the dividend gives them an even higher yield and le

higher return on invested capital.

Companies typically increase the dividend on a regular basis, so an increase may also signal a longer-term trend of increasing dividend payments. This will please investors looking for a stable and regular source of additional income. Investors can also expect that if a company is doing well enough to increase dividends, its share price could rise in the future. Higher dividends and share price growth may then generate a higher total return for shareholders.

We take a look at three companies that have just sensibly increased their dividend today!

Apple$AAPL+0.0%

Apple is the most valuable company in the world and a global leader in smartphones, tablets and personal computers. The company was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne.

AAPL

Apple

AAPL
$184.37 $2.05 +1.12%
1 Day
+1.12%
5 Days
+0.52%
1 Month
-4.91%
6 Months
+4.03%
1 Year
+23.81%
YTD
-0.68%
5 Years
+326.39%
Max.
+143,546.28%

Capital Structure

Market Cap
2.85T
Enterpr. Val.
2.87T
Revenue
385.71B
Shares Out.
15.44B
Debt/Capital
0.59
FCF Yield
3.81%

Valuation / Dividends

P/E
28.67
EPS
6.43
P/S
7.26
P/B
37.97
Div. Yield
0.53%
Div. Payout
14.95%

Capital Eff. / Margins

ROIC
55.51%
ROE
156.04%
ROA
28.55%
Gross
45.03%
Operating
30.76%
Net Profit
26.16%
0
1
2
3
4
5
6
7
8
9

The main pillars of their business are products such as the iPhone, iPad, Mac, Apple Watch and Apple Music, Apple Pay and Apple Care. The company's profits are largely made up of iPhone smartphone sales, which currently account for more than half of their revenue. The latest generation of the iPhone continues to sell very well and Apple regularly releases updates to its flagship products.

This is what Apple's business model looks like. Source

Apple's stock has been rising for a long time, and the company regularly returns a portion of its profits to shareholders in the form of dividends. However, revenue growth has been slowing in recent years as the smartphone market has reached a certain maturity. Apple is looking to expand into other areas such as services or new products. Still, Apple still has a strong brand and loyal customers, so it should remain among the technology leaders. Thus, Apple stock remains attractive for investors looking for a stable dividend company.

Apple's dividend is not staggering, but it is stable and can be expected to be sustainable for such a giant. Source

Apple announced on May 4 that it is raising its quarterly dividend by 4% to $0.24, bringing its annual dividend to $0.96. This brings the dividend yield to approximately 0.54%.

While this is a relatively low dividend, investors should consider the prospect of further dividend growth in future years. Apple has had eleven years of annual dividend increases, introduced in 2012. However, the best reason to expect dividend growth is Apple's low dividend payout ratio - it pays out just 16% of earnings as dividends. This means that there is plenty of room for corporate management to increase dividends over the next decade.

In addition to dividends, Apple also returns cash to investors through share buybacks. In the second quarter, Apple spent $19.1 billion on share buybacks versus $3.7 billion on dividends.

Vodafone$VOD+0.0%

Vodafone is a British telecommunications company that provides mobile and fixed line services, data and cable television. It is one of the largest operators in the UK domestic market, competing with O2 and EE. Vodafone also operates worldwide in over 30 countries.

VOD
$8.40 -$0.07 -0.83%
1 Day
-0.83%
5 Days
-0.94%
1 Month
-4.33%
6 Months
-7.18%
1 Year
-30%
YTD
-5.08%
5 Years
-54.47%
Max.
+255.93%

Capital Structure

Market Cap
22.75B
Enterpr. Val.
75.22B
Revenue
-
Shares Out.
2.71B
Debt/Capital
-1.07
FCF Yield
41.08%

Valuation / Dividends

P/E
2.06
EPS
4.08
P/S
0.47
P/B
-0.19
Div. Yield
12.19%
Div. Payout
20.98%

Capital Eff. / Margins

ROIC
-31.77%
ROE
-9.58%
ROA
7.61%
Gross
32.50%
Operating
31.28%
Net Profit
25.90%

Vodafone was formed by the merger of the British company Vodafone and the German company Mannesmann in 2000. It is the only UK telecommunications operator with a direct global footprint. It has around 400 million customers worldwide and operates around 80 mobile networks.

The company's turnover has been increasing over the long term, mainly due to growth in the markets of Southern Europe, Africa and Asia. Vodafone has around 79,000 employees in more than 25 countries, with much of its infrastructure owned or managed through partnerships.

In recent years, Vodafone has invested heavily in infrastructure, particularly its 5G network. However, it has been unable to maintain revenue growth in its domestic market and has faced declining customer numbers, particularly in fixed high-speed internet. Thus, the upward trajectory of its overseas expansion has recently been offset by weak performance in the UK domestic market. The company's shares are tracking overseas growth volumes, which could provide plenty of upside potential for investors. But that should change with the arrival of new management.

The new management strategy is already bearing fruit in the form of financial results.

In terms of cost savings, Vodafone has already identified $500 million in savings by the end of Q3 2023, half of the $1 billion target.

On pricing, Vodafone is seeing ARPU growth from mobile services in six markets, including Germany, and expects further upside as new inflation-linked pricing contracts are entered into.

ARPU (Average Revenue Per User) is a metric used by telecommunications companies and other subscription service companies. It shows the average revenue per user.

Telecom operators or streaming service providers make money by providing services to their customers. ARPU shows how much they earn on average from each individual customer. It is calculated by dividing the total revenue from mobile services by the number of customers.

ARPU is an important indicator for investors because it shows how a company is growing revenue from each existing and new customer. When ARPU grows, it means the company is succeeding in increasing the average revenue per customer - either by making services more expensive or selling more add-on products to existing customers. Both increase the potential for future profits. Conversely, a decline in ARPU signals that the company's revenue growth depends more on an influx of new customers than on higher revenue from each existing customer.

After removing non-performing assets such as the Hungarian unit, Vodafone has managed to reduce debt for three consecutive years. As a result, long-term debt has fallen to $48.5 billion from $63.9 billion in 2020. With operating cash flow holding above $20 billion and free cash flow continuing to improve, Vodafone will be able to continue to increase its dividend through debt reduction. And it's proving that with its latest 7.53% increase on 16 May.

The dividend in this case is not as nice and stable as, say, Apple's. Source

Northrop Grumman$NOC+0.0%

Northrop Grumman is an American weapons and technology company based in Falls Church, Virginia. It develops and integrates systems for the U.S. government and global markets in aerospace, defense, and security.

Northrop Grumman's principal products and services include: military aircraft, transport aircraft, electronics, unmanned aerial vehicles, naval systems, space electronics and systems. In the past, it has produced nuclear launchers, bombers, stealth aircraft and Global Hawk drones.

Here again, dividend growth is already well underway. Source

Northrop Grumman is the fifth largest weapons company in the world. It generates much of its profits from the US Department of Defense, NASA and the Air Force and Navy.

The company is the successor to the original Northrop Aircraft in 1939. Over time, it has merged with many other weapons and technology companies, including Grumman Aircraft, Westinghouse Electric and TRW. This trend of acquisitions continues today.

Northrop Grumman stock is considered relatively stable due to its steady growth, earnings and dividend. The company has a high leverage on U.S. Department of Defense spending, so its results are largely driven by the size of defense budgets. Over the long term, investors watch the company's sales and earnings growth rate to see if it can use rising government spending to its advantage.

With the acquisition of Orbital ATK and the growing demand for space solutions, commercial satellites and spaceflight, Northrop Grumman is well positioned for future growth. Revenues grew 7% in the first quarter, with one-third driven by the ground-based strategic deterrent program and higher fighter build volume.

Overall, the company is expected to post 4% revenue growth for the full year to $38 billion and slightly lower profit growth. Free cash flow is expected to be 2 billion at mid-year due to higher investments and settled research taxes. The dividend was raised by 8.09% to yield 1.67%. This follows a long run of previous increases in a sector that has been extremely resilient and so it is reasonable to assume that this streak will continue.

Have any of your favorite companies raised their dividend recently?

Disclaimer: This is by no means an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.

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