Don't settle for dividend stocks that don't raise their payouts. If a dividend-paying company is doing well, it should generally have room to increase its dividend, even if by a modest amount. It's not only a good indicator that the business is doing well, but it also means more dividend income for you. Three companies that raised their dividend payments this month are Realty Income (O +0.67%), Target (TGT +1.32%), and FedEx (FDX +2.78%).
1. Realty Income
Realty Income makes dividend payments on a monthly basis, and the real estate investment trust (REIT) makes for a good, diversified income investment to hold. The REIT's portfolio includes a broad mix of tenants from all areas of the economy. It's not focused on just apartments or hospitals. Instead, it has over 1,500 clients spread across 89 industries.
NYSE: O
Key Data Points
The REIT often makes multiple dividend increases throughout a year, but since its payments are made every month, they often aren't huge. On June 11, the REIT announced that its monthly dividend would again be going up, from $0.2625 to $0.2630. The payment, which is scheduled for July, is 16% higher than what it was paying its investors five years ago -- $0.2265. The stock's 5.9% yield means you could be collecting more than four times what you would with the average S&P 500 stock, where the average yield is around 1.3%.
This year, the REIT expects its normalized funds from operations per share to come in between $4.17 and $4.29, which would be well above the current rate of its annual dividend -- $3.16. Realty Income's high dividend yield may not stay this high once interest rates come down; by then, the stock could be rallying. For income investors, now is as good a time as any to buy shares of this top dividend stock.
2. Target
Among the primary reasons investors love owning shares of Target is for the Minneapolis-based retailer's continually growing dividend. At 3.2%, investors can already get an above-average payout from the retail stock. What sweetens the deal is that Target is also a Dividend King, having raised its payout for not just years but decades.
NYSE: TGT
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That's why Target's latest dividend hike announced this month was business as usual, without much fanfare. The company said it was raising its dividend by a fairly modest rate of 1.8%, as it extends its dividend growth streak to an impressive 53 straight years. But Target has made larger increases in recent years, after benefiting from a surge in pandemic-fueled traffic to its stores. The new quarterly dividend of $1.12, which is payable in September, is 70% higher than the $0.66 it was paying shareholders five years ago.
It hasn't been a great year for Target's stock, as it is up just 1% since January. But with a modest valuation of 16 times its trailing earnings and it being a leader in the retail industry, this can be another solid income-generating stock to buy and hold for the long term.
3. FedEx
The largest dividend increase on this list comes from logistics company FedEx. Last week, the company announced it would be raising its annual dividend by 10% to $5.52.In five years, the company has more than doubled its dividend payments. Even with the increase, however, the stock's yield is now 2.2%, which is still the lowest rate on this list.
NYSE: FDX
Key Data Points
Shares of FedEx are down this year. Economic conditions haven't been great, and that has been evident in the company's results as sales have been down due to weaker demand. Through the nine-month period ending Feb. 29, the company's revenue totaled $65.6 billion and fell 4% from the same period a year ago.
The good news is that as economic conditions improve, the company should be in much better shape in the future. It's currently trading at just 11 times its estimated future profits, and it could make for a steal of a deal right now for both dividend and growth-oriented investors.
