I wouldn’t typically strike you with a cliche right out of eviction, however here goes: “Skate to where the puck is going to be, not where it is.” Hockey excellent Wayne Gretzky first spoke those words. Ever since, the statement been repeated numerous times that it has actually ended up being a cliche. However cliches do not become cliches by being false. The truth is that Gretzky’s technique is still applicable in many arenas beyond hockey, including purchasing dividend stocks.
If you’re a retiree, this idea is specifically essential. You don’t want to purchase dividend stocks that have actually had strong dividends in the past however are likely to cut payments in the future. You’re much better off buying the stocks of strong companies that have actually demonstrated they like to increase their dividends.
3 stocks with specifically fast-growing dividends are AbbVie (NYSE: ABBV), Bank of America (NYSE: BAC), and The House Depot (NYSE: HD). Here’s why retirees will like these three stocks.
With apologies to Wayne Gretzky, often looking at where the puck has been can be practical. At least the metaphor works with a stock like AbbVie. Including the years that AbbVie belonged to its moms and dad, Abbott Labs, before being spun off as a different entity in 2013, the business has actually increased its dividend for 47 successive years. Over the past 3 years, AbbVie has enhanced its dividend by 67%, with its yield now standing at a mouthwatering 5.8%.
However should you be worried about AbbVie’s dividend due to declining sales for its leading drug Humira and the business’s increased debt load resulting from its planned acquisition of Allergan? I don’t believe so. For something, the Allergan offer will decrease AbbVie’s reliance on Humira. Also, the business expects to rapidly decrease its debt levels. Most notably, AbbVie will continue to remain in terrific shape to provide ongoing dividend payments.
The company declares other blockbuster drugs with strong momentum. AbbVie’s two recently authorized immunology drugs, Rinvoq and Skyrizi, might combine for more than $10 billion in peak annual sales. Allergan brings huge winners Botox, Juvederm, and Vraylar to the table. My prediction is that AbbVie’s dividend will grow, however its dividend yield could fall as the stock rises, with financiers realizing they have actually been too downhearted about the huge drugmaker.
2. Bank of America
Bank of America’s long streak of dividend increases came to a screeching halt throughout the economic crisis of 2008 and 2009. However the financial-services huge quickly returned to its dividend-growing ways, increasing its dividend in each of the past six years and increasing the payment by an outstanding 140% over the past 3 years. Bank of America’s dividend now yields a healthy 2.5%.
When Warren Buffett considerably increases Berkshire Hathaway’s position in a stock, it’s worth taking a look at that stock. That’s precisely what has actually occurred this year with Bank of America, with the stock now Berkshire’s 2nd largest holding. What’s specifically notable about Buffett’s move is that it increased Berkshire’s stake in Bank of America above the magic 10% limit where additional regulative requirements begin.
Why does Buffett like Bank of America? Probably due to the fact that the business has actually provided industry-leading development but its stock is still a bargain with shares trading at only 10 times anticipated profits. Those reasons, along with its strong dividend growth, are good ones why senior citizens who aren’t billionaires and investing legends should like Bank of America, too.
3. Home Depot
Home Depot didn’t increase its dividend for a few years at the end of the last decade. However the home-improvement leader consequently put the pedal to the metal, increasing its dividend payment by 444% considering that 2011 and almost doubling its dividend in simply the last 3 years. House Depot’s dividend yield presently stands at 2.3%.
You might look at House Depot’s second-quarter efficiency and have some qualms about purchasing the stock. The company reported slow growth and lowered its full-year 2019 outlook. However the reasons behind this weak point– low lumber costs, tariffs, and wet weather condition– aren’t permanent problems that basically change House Depot’s long-term potential customers.
Home Depot essentially delights in a duopoly in the U.S. home improvement market along with its competitor, Lowe’s. The company remains financially strong. And while the home enhancement market can be cyclical in nature, over the long term you can count on the fact that consumers and professionals will need supplies to finish their tasks. I believe that Home Depot, like AbbVie and Bank of America, will supply senior citizens reputable and growing dividends for several years to come.