43 Dividend Hikes We Expect Before 2021 Ends

The surest, safest way to double our money in the stock market is to buy the dividends that are growing the fastest.

It doesn’t matter if the broader market is heading up, down or sideways. Over time, stock prices eventually follow their dividends. Show me a growing payout, and I’ll show you a stock price that has serious upside.

Looking beyond current yields for future dividends is a simple yet powerful concept. I know that you already appreciate stocks that pay. It’s why we get along so well.

We can also apply our favorite fundamental attribute—a company’s willingness and ability to put cash in our pocket—to find the safest growth stocks in the market. Their shares can double in price while paying us a nice dividend.

We’re not talking crypto. Or “meme” stocks. Just fundamentally sound payers, with real products and profits, that will compound our portfolios as they raise their dividends.

Let’s look at an example. L3Harris Technologies (LHX) is a dividend stock that, on the surface, never appears to pay much.

On January 1, 2010, LHX paid 1.7%.

Fast forward 11.5 years later to today and LHX yields… 1.7%.

This may sound unremarkable to “first-level” income investors. (More on them in a moment.) The lack of sizzle is their loss and our future gain.

While they were sleeping downstairs, they were missing the action in the payout penthouse. Dividend growth of 364% powered price growth of… wait for it… 361%.

We’re about to see a bunch of dividend raises—the types of hikes that powered LHX higher and higher. Which means right now is the time to consider “front running” these dividend announcements.

Here’s a list of 43 companies that are due to raise their dividends during the fourth quarter. Let’s review the most notable batches of them, including a closer individual look at a few companies that are hiking their payouts at a rapid clip.

Big Healthcare

Featured Stock: Zoetis (ZTS)

For the first few years after Pfizer (PFE) first spun off Zoetis (ZTS), there wasn’t much indication that the animal-health pharmaceutical specialist was going to be a dividend-growth dynamo. Up through the end of 2015, investors were treated to a lone payout hike, from 7 cents to 8 cents per share.

Zoetis has become more aggressive since then. All told, ZTS has upped its dividend at a 17% annual clip since 2013, including a monster 25% raise last year to its current 25 cents quarterly.

You might hear “animal health” and think this is some small market niche. Not so. Zoetis, the largest pure-play animal health company, did some $6.7 billion in revenues in 2020—6.6% revenue growth in a year in which many businesses hit the skids. ZTS was the beneficiary of a sudden swarm of pet adoptions in the midst of the pandemic, but this isn’t a one-hit wonder theme—the global animal-health market (which includes pets and livestock) is expected to grow around 9% compounded annually through 2028.

ZTS makes hay (sorry but had to say it) thanks to products such as canine dermatitis drug Apoquel and injectable cattle antibiotic Draxxin. It’s also building up product wins of late, including an approval for Cerenia (injection to treat vomiting in cats) in China, and a green light in Canada for Solensia (another injection, this one to treat feline osteoarthritis pain).

Outperformance in 2021 hints that ZTS shareholders could be in for another big payday. Let’s keep our eyes peeled in mid-December, when Zoetis typically announces its annual dividend hike.

Real Estate Investment Trusts (REITs)

Featured Stock: Innovative Industrial Properties (IIPR)

Those unfamiliar with the space might mistake Innovative Industrial Properties (IIPR) with a warehouse or logistics REIT, given the name. But the bland moniker veils a specialty in one of the growthiest markets of all:

Weed.

Innovative Industrial Properties is a trailblazer in the marijuana real estate space, with 54 properties across 18 states that are 100% leased out to state-licensed medical-use marijuana growers. It primarily operates under a sale-leaseback model, where it purchases property from the grower to provide an immediate influx of capital, allowing them to invest it back into their operations; they then lease the property from IIPR.

How’s the business doing? Let’s take a quick look at how the company has done since coming public near the end of 2016:

Adjusted Funds From Operations

• 2017: $2.4 million
• 2018: $9.7 million
• 2019: $34.9 million
• 2020: $97.8 million

Since IIPR is a real estate investment trust, and must return 90% or more of its profits as dividends. Which means this marijuana landlord is continually puffing its payout higher.

Importantly, IIPR is a quarterly dividend raiser. Its last hike was by more than 7%, to $1.50 per share. But year-over-year, that’s roughly 28% better thanks to a total of four dividend improvements since last September.

Up next? Expect an announcement sometime in the middle of December.

Dividend Aristocrats

Featured Stock: Roper Technologies

Dividend Aristocrats have two reputations. One is for being the most reliable of dividend payers—a fair title given that the minimum requirement for membership is a full 25 years of uninterrupted payout hikes, and given that many boast much longer streaks.

But the other, less discussed reputation is that many Aristocrats can be on the miserly side. After all, if you’ve been improving your dividend that long, chances are you’re already paying a majority of your profits out as dividends. That means your ability to keep upping the ante is tightly tethered to your ability to boost your earnings—and mature multinationals aren’t exactly blowing the doors off with growth. So it’s not uncommon to see some Aristocrats dole out 3%, 2%, even 1% hikes on the regular.

Roper Technologies (ROP) is largely doing much better.

Roper’s businesses will frankly put you to sleep. Its various business arms include application software such as lab information management solutions offering CliniSys; network software and systems like Canadian transportation platform Loadlink Technologies; measurement and analytical solutions like process and packaging weighing equipment maker Hardy; and process technology providers like engineered pump manufacturer Cornell.

But boring is beautiful. All of these businesses make the world go ‘round, and Roper’s diverse assortment means even when some of its lines are struggling, others are likely picking up the slack. Unsurprisingly, revenues have been steadily growing for years, and appear to be on pace for another improvement in 2021.

Investors have reaped the rewards, in more than one way. In addition to about 50 points of market outperformance over the past five years, ROP shares have also packed on the cash. The dividend has expanded by more than 13% annually in that time, including a roughly 10% hike last year for Roper’s 39th consecutive annual dividend increase.

Given how steady those raises have been, Roper’s next hike—likely to be announced in mid-November—could sniff double digits yet again.

Big Yielders

Featured Stock: Artisan Partners Asset Management (APAM)

Artisan Partners Asset Management (APAM) is a global asset management firm, albeit a mid-range one with about $175 billion under management and a $4 billion market cap. And its mutual fund offerings currently total a sparse 20 here in the U.S., making it a relative minnow compared to the likes of Vanguard and Fidelity.

That said, for all the talk of the decline of mutual funds, APAM is a delightful growth story. Assets under management have grown by roughly 15% compounded since 2009. Revenues have improved by about 25% between 2016 and 2020, while net income is up 191% in that time. 2021 has been awfully good to Artisan Partners, too—management fees across its Artisan Funds and Artisan Global Funds are up 52% year-over-year through the first six months of the year.

And APAM has rewarded investors in two ways.

For one, it has boosted its regular payout by more than 13% annually on a compounded basis since 2017. It also supplements those payouts with a special dividend each year. 2021’s payout, for instance, lifts APAM’s yield from about 7% to 7.8%.

It’s worth noting that Artisan Partners’ dedication to dividend growth is a relatively recent thing, and it’s not very consistent. The payout was stuck at 60 cents quarterly from 2015 through 2020, with a couple of slightly smaller dividends in between. Even of late, its last few dividends have been 83 cents, 97 cents, 88 cents and $1.00 most recently—though that last one is almost 50% better than the year-ago pay out.

A long way of saying: APAM might not increase its dividend come late October … but it could, and it could by quite a lot, if history is any indication. If nothing else, this stock is worth monitoring on a quarterly basis, as its dividend arrow is broadly pointed in the right direction.

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: Your Early Retirement Portfolio: 7% Dividends Every Month Forever.

Disclosure: none