Customers like Aflac for its duck ads, but investors like it for its dividends. Image source: Aflac.
The best dividend stocks are those that manage to sustain and grow their quarterly payments to shareholders over time. A select few companies have put together impressive track records of consistent dividend increases year-in and year-out at roughly the same time of year, so you can actually predict many payout boosts before they happen.
Let's look at three dividend stocks that should be making payout increases in the next month or two.
Aflac will make dividend investors quack
Insurance specialist Aflac (AFL +1.37%) has a popular marketing presence with its distinctive duck commercials, but it has also found a profitable niche by selling specialty supplemental insurance products. By focusing on higher-margin policies, Aflac has built up an impressive competitive moat against potential rivals. Moreover, with the company getting the bulk of its business from Japan, Aflac offers the geographical diversity many insurance companies have sought to build over time.
For 32 straight years, Aflac has shared its success with shareholders via higher dividends, and last year's dividend increase came in late October. With the stock currently yielding about 2.7%, a boost of similar size to the 2014 increase of about 6% could lift the quarterly payout to $1.65 per share. Aflac has done reasonably well with its core business, and despite headwinds from a strong U.S. dollar, the insurance company should be able to sustain its dividend streak.
Look for spicier payouts from McCormick
Spice maker McCormick (MKC 5.94%) plays a vital role in kitchens across the U.S. and around the world, but it isn't just attractive to its customers. The stock has also paid rising dividends for 29 straight years, and based on past practice, shareholders can expect a move to come toward the latter half of November. Any improvement could send the yield well above its current 2% level.
McCormick has had to deal with some challenging conditions in its core markets, with its international business struggling from weak foreign currencies in areas like Mexico. Nevertheless, when you back out currency impacts, McCormick's sales performance has been reasonable. Investors will want to see stronger earnings gains in the future, but a dividend increase would nevertheless be a welcome sign of confidence from the spice maker going forward.
Parker-Hannifin
October is typically a good month for dividend-seeking shareholders of Parker-Hannifin (PH +3.73%), with the automated control-system manufacturer historically raising its quarterly dividend during the month. This year would mark the 60th consecutive annual increase for Parker-Hannifin, and an addition to its current 2.5% yield would just enhance what's already a solid payout.
Parker-Hannifin has enough exposure to the energy industry that its stock has suffered substantial declines so far in 2015, with shares down more than 20% from their highs earlier in the year. Yet the company pays only about a third of its earnings to shareholders in the form of dividends, so even any short-term weakness that might result from poor performance in some of the company's segments shouldn't hold the company back from a dividend boost. Investors probably shouldn't expect a repeat of last year's impressive 31% payout increase, but a more modest rise would still leave most dividend investors satisfied.
Dividend investors look for stocks with long track records of success, and even with the stock market having come under pressure over the summer, these three companies have a history of continuing to raise payouts, even under less than ideal conditions. Barring some unforeseen catastrophe, there's a very good chance each of these three stocks will keep paying off for dividend investors seeking reliable income.
