Four Stocks to Buy for Double-Digit-Percentage Dividend Hikes

Four stocks to buy for double-digit-percentage dividend hikes may interest investors eyeing protection from recent bank collapses and any others that may follow.

The four stocks to buy for double-digit-percentage dividend hikes hold special appeal amid unsteady market reactions to the seizure of three large banks by U.S. regulators within the past two weeks and the Swiss government brokering UBS Group AG’s purchase of financially struggling Credit Suisse for more than $3 billion in an all-stock deal that included an extra $100 billion from the Swiss central bank as a sweetener to consummate the combination. The four stocks to buy for double-digit-percentage dividend hikes each have undeniable growth prospects to prop up their payouts and power toward share-price increases.

The three big bank closures in the past two weeks should not affect any of these stocks that stand out for their recent double-digit-percentage dividend increases. Santa Clara, California-based Silicon Valley Bank (NASDAQ: SIVB), New York’s Signature Bank (NASDAQ: SBNY) and La Jolla, California-based Silvergate Bank (NYSE: SI) each collapsed due to excess risk taking.

Four Stocks to Buy for Double-Digit-Percentage Dividend Hikes as Banks Falter

In the January prediction issue of Forecasts & Strategies investment newsletter led by Mark Skousen, PhD, he predicted a financial crisis in 2023: “Now we are facing another alarming trend, what I call ‘The Fed Disaster Plan,’ raising interest rates in a fast and furious fashion, causing a potential recession, a prolonged bear market on Wall Street and perhaps even a monetary crisis in 2023.”

Three months into the year, a monetary/banking crisis has caused financial institutions to scramble for liquidity, Skousen wrote in the April 2023 issue of his newsletter. The portfolio of recommendations in the newsletter “weathered the storm,” he added.

“We made a few conservative changes in our portfolio, avoided investing in bonds, and focused instead on high-income stocks and funds, profitable technology companies and gold as a hedge against monetary instability,” Skousen wrote.

Skousen, who also leads the Five Star Trader advisory service that features stocks and options, identified weakness developing in the stocks and the market when he told his subscribers to take profits. As an economics professor, Skousen tracks inflation and recession risk closely.

Mark Skousen, a scion of Ben Franklin and head of Five Star Trader, meets Paul Dykewicz.

Pension Chairman Stresses the Need for Risk Management

“When the Fed is openly supporting stock markets and economic growth, it’s easy to make money by taking a lot of risk,” said Bob Carlson, a pension fund chairman and leader of the Retirement Watch investment newsletter. “But when the Fed changes course, risk management is important to success and survival. SVB had weak risk management. Investors need to look beyond a firm’s financial numbers and try to determine if it has adequate risk management policies.”

Retirement Watch head Bob Carlson discusses investing with Paul Dykewicz.

As a pension fund chairman, Carlson is savvy about managing investment risks. He has served on the Board of Trustees of the Fairfax County Employees’ Retirement System since 1992 and has been elected to serve as its chairman every year since 1995.

Skousen recommended a dividend-paying pharmaceutical stock that injected a potent profit for subscribers of his Forecasts & Strategies investment newsletter, even when the market weakened during the pandemic. New York-based Pfizer Inc. (NYSE: PFE) soared 54.76% from December 2015 to July 2021, while Skousen recommended the stock.

Deere Plows Among Four Stocks to Buy for Double-Digit-Percentage Dividend Hikes

Moline, Illinois-based Deere & Co. (NYSE: DE) has displayed a rising dividend policy since 1988, and it boosted its payout by 10.6% with a pair of increases in the past six months. Skousen, who recommended the stock in January to subscribers of his Five Star Trader advisory service, grew up on a 50-acre farm outside Portland, Oregon, where he drove the Deere tractor of his father, Leroy Skousen.

Skousen took interest in Deere selling under 16 times forward earnings and offering a return on equity (ROE) of 37%. Skousen, as head of the Forecasts & Strategies investment newsletter, further recommended specific call options in Deere. Such call options can jump much higher than the share price.

Chart courtesy of www.stockcharts.com

According to Zacks Research, Wall Street estimates have been rising recently, with earnings growth expected to increase by 20% during fiscal year 2023.

Deere Intrigues Portia Capital Among Four Stocks to Buy for Double-Digit-Percentage Dividend Hikes

Deere has done an “excellent job” supporting its stock price by repurchasing 25% of its shares outstanding in the past 10 years, said Michelle Connell, head of Dallas-based Portia Capital Management.

The company is known for buying shares when valuations are low and using its cash for these purchases, Connell continued. There have been some concerns regarding Deere’s insider sales of approximately $4 million in 2022, she added.

“These don’t bother me,” Connell counseled. “Executives frequently have tight windows for the sales of their shares, and estate planning may also be part of the executives’ strategy. I like DE because it takes advantage of the fact that that as a population increases, the demand for affordable food increases as well.”

Michelle Connell leads Dallas-based Portia Capital Management.

Oracle Is Among Four Stocks to Buy for Double-Digit-Percentage Dividend Hikes

Oracle (NYSE: ORCL), a multinational computer technology company headquartered in Austin, Texas, recently reported solid fiscal third-quarter results, despite a “modest miss” of $52 million on revenue due to a mix-shift to more subscription revenue, according to a research note from Chicago-based investment firm William Blair & Co. Meanwhile, non-Generally Accepted Accounting Principles (GAAP) showed that Oracle’s operating margin improved from the prior two quarters to 42%, and non-GAAP earnings per share (EPS) were ahead of consensus estimates by two cents. Constant-currency revenue growth in the third quarter, excluding contribution from health technology business Oracle Cerner, reached 7%, driven by continued demand for Oracle’s cloud business.

Oracle management provided fourth-quarter revenue guidance in line with consensus estimates and non-GAAP EPS ahead by $0.11, despite a 2-percentage point currency headwind. Though traction for Oracle’s cloud portfolio continues to be the major driver of growth and management expects the business to accelerate, William Blair expressed concern about Oracle’s positioning in the database market, as well as the continued macro uncertainty that management alleges has had a limited impact on growth.

The analysts also are monitoring the impact on free cash flow from the integration of the company’s lower-margin Oracle Cerner business, as well as continued investments in capital expenditures of approximately $2 billion per quarter through most of fiscal 2024. At an enterprise value to free cash flow multiple of 36 times calendar 2023 estimates and a balanced risk/reward equation for the stock, William Blair rates the stock “market perform.”

With the double-digit-percentage dividend increase of 25%, Oracle offers the potential of a technology stock that should climb in the future and a rising dividend payout.

Chart courtesy of www.stockcharts.com

New York-based American Express (NYSE: AXP) is best known as a credit card services provider, but it describes itself as an integrated payments platform. While most companies are incorporating a slowing economy and an uptick in unemployment and charge-offs in 2023, recent trends and management commentary suggest performance through February is tracking in line with or slightly better than expectations, according to Chicago-based investment firm William Blair.

The labor market remains strong and consumer balance sheets are under levered, payment rates are moderating but remain elevated, and stable consumer spending is resilient, as U.S. unadjusted ex-auto retail sales rose 8.0% in January/February versus +7.2% in the December quarter, the investment firm noted.

“We anticipate loan growth to moderate and charge-offs to increase in 2023,” William Blair opined. “Despite the recent volatility, we are very comfortable with the strength of the balance sheets of the large issuers including American Express, Discover, and Bread Financial as they all have significant deposits and hold securities on the balance sheet. These issuers have very small “unrealized losses” on their securities portfolios and also have access to ample other funding sources, including securitization of credit card assets.

Loan growth in the managed portfolio remains strong and consistent with January, up 21% for the group, and should contribute to both rising net interest income and credit losses in the coming months, William Blair wrote. Managed loan 30-day delinquencies rose seven basis points month-to-month in February to 3.16% and jumped 93 basis points year-over-year versus 2.23% in February 2022, while charge-offs rose 39 basis points month-to-month to 3.80% and are up 159 basis points year-over-year from 2.21% in February 2022.

Chart courtesy of www.stockcharts.com

The American Express Company’s board of directors announced on March 8 its approval to repurchase up to 120 million common shares, in accordance with the company’s capital plans. The authorization replaced the approximately 36 million common shares of common stock previously approved in 2019.

The timing and the common shares purchased under the company’s authorized capital plans will depend on factors such as the company’s business plans, financial performance and market conditions.

Separately, the directors approved a $0.08, or 15% increase in the quarterly dividend on the company’s common stock, consistent with a planned increase mentioned in the company’s fourth-quarter 2022 earnings release. The dividend was raised to $0.60 per common share, from $0.52, payable on May 10, 2023, to shareholders of record on April 7, 2023.

Steel Dynamics Rounds out Four Stocks to Buy for Double-Digit-Percentage Dividend Hikes

Fort Wayne, Indiana-based Steel Dynamics, Inc. (NASDAQ: STLD), one of the largest domestic steel producers and metal recyclers in the United States, is a favorite of Portia Capital’s Connell. Key reasons to own Steel Dynamics include its strong fundamentals, generating an average of $1.4 billion cash per year for each of the last 10 years, Connell counseled.

Steel Dynamics also has never missed a dividend in the past 10 years, while recently boosting its payout 25%, Connell said. In addition, steel is a necessity for building out renewable energy, whether it’s a wind generator, a solar panel or an electric recharging station, Connell added.

Another appeal is that demand for steel will remain high for the next three to five years, Connell said. Long-term averages for the company’s price-to-earnings (P/E) ratio and price-to-sales ratio shows the stock is undervalued, Connell continued.

Connell concluded that Steel Dynamics could soar more than 20% during the next 12-18 months.

Chart courtesy of www.stockcharts.com

China’s Xi Visits Russia While Japan’s Leader Goes to Ukraine for Talks with President Zelenksy

Russia’s hawkish former President Dmitry Medvedev said on Friday, March 24, that his country’s military could send troops back to Kyiv, despite their current struggle in eastern Ukraine. 

Now the current deputy chairman of Russia’s Security Council, Medvedev has repeatedly talked about potential new offensives since the war in Ukraine started on Feb. 24, 2022. “Nothing can be ruled out” about Russia’s war effort, news reports quoted Medvedev saying.

The remarks occurred just days after Japan’s Prime Minister Fumio Kishida visited Ukraine’s President Zelensky in Kyiv on Tuesday, March 21. On the same day, China’s leader Xi Jinping met with Russian President Vladimir Putin in Moscow for talks. Xi called Putin a “dear friend,” even though the International Criminal Court issued an arrest warrant Friday, March 17, for the Russian president and accused him of having responsibility for war crimes in Ukraine that followed the invasion he ordered more than a year ago.

Putin committed the “war crime” of overseeing the unlawful abduction and deportation of children from Ukraine to Russia, among others, the court stated in a press release. The visit by Xi appears aimed at shifting blame for the war in Ukraine to the United States and its allies, analysts said. Putin called the attack on Ukraine a “special military” operation, but it has grown into an extended war of more than one year, even though Russia’s leaders reportedly expected a quick victory.

CDC Shows Vaccinations Against New Bivalent Variant of COVID-19 Keep Rising

The U.S. Centers for Disease Control and Prevention (CDC) reported rising vaccination rates against COVID-19 and its bivalent variant. The CDC reports that 269,835,963 people, or 81.3% of the U.S. population, have received at least one dose of a COVID-19 vaccine, as of March 22. People who have completed the primary COVID-19 doses totaled 230,283,056 of the U.S. population, or 69.4%, according to the CDC. Also as of March 22, the United States has given a bivalent COVID-19 booster to 51,335,207 people who are age 18 and up, equaling 19.9%. Vaccinations should help consumers shop, travel and spend money to support the economy.

The four stocks to buy for double-digit-percentage dividend hikes feature companies that are capable of delivering capital appreciation and rising payouts. All four could entice investors seeking refuge from big bank failures, Russia’s continuing onslaught against Ukraine and economic concerns.