7 Stocks With the Greatest Near-Future Dividend Growth Potential
Trading stocks can be exhilarating. It’s like riding a horse blindfolded — the inexperienced quickly get disoriented, while the experienced trust the horse and hope for the best — but with higher stakes. Like gambling, the chance to earn a significant return on your investment is weighed against the chance to lose some or all of your investment. However, unlike most kinds of gambling, there are ways that the savvy and patient can earn reliable returns over a long period of time.
Most people with money in the market are investing in a nest egg, such as their retirement or their children’s college fund. This is the kind of money that people don’t want to gamble with: they want to invest it with as little risk as is tolerable. They want to invest for the long run and would rather see their money grow slowly but surely than in dramatic swings between profits and losses.
For this class of investor, stocks with large dividends have always been a favorite pick. Stocks that offer large dividends generally belong to companies that are more mature, that have more established businesses, and that have a well-defined place in the market. This generally means slower growth but also less risk.
If you’re interested in dividend stocks, something to look out for are companies that are expected to increase their dividend rapidly in the near future. Analysts at Bloomberg compiled a list of the 25 stocks with the highest projected dividend growth over the next three years. Here’s a look at the top seven.
1. American Tower Corp. (NYSE:AMT)
American Tower Corp. is a real estate investment trust that owns and operates wireless and broadcast infrastructure in the the U.S., Brazil, Mexico, and India. One of the largest owner-operators of wireless and broadcast towers in the U.S., the company pulled in $2.88 billion in revenue in 2012, up 17 percent from 2011, and analysts are expecting revenue to increase 16.1 percent in 2013 to $3.34 billion (earnings are due February 25). Shares are currently up 14.5 percent over the past year and 34.2 percent over the past two years.
The company currently offers a dividend yield of 1.39 percent, and the analysts at Bloomberg project three-year dividend growth of 19.67 percent. The projected yield in 12 months is 1.58 percent.
2. Zimmer Holdings Inc. (NYSE:ZMH)
Zimmer Holdings is a medical devices company that has grown rapidly in the past few years. Shares are up 29 percent over the past year and are up 55.6 percent over the past two years as the company capitalizes on the evolving medical and healthcare landscape. Revenues increased 3.4 percent in 2013 to $4.6 billion, and earnings per share increased 3.3 percent to $4.43 for the year.
Zimmer Holdings currently offers a dividend yield of 0.83 percent, and the analysts at Bloomberg project three-year dividend growth of 20.51 percent. The projected yield in 12 months is 0.96 percent.
3. Discover Financial Services (NYSE:DFS)
Discover Financial is a consumer finance company that you may know from snail-mail solicitations to sign up for one of its credit cards. People must be biting, because shares are up nearly 49 percent over the past year and 92 percent over the past two years. Revenue increased 5.6 percent in 2013 and earnings per diluted share were up 11.2 percent for the year.
Discover Financial offers a dividend yield of 1.5 percent, and the analysts at Bloomberg project three-year dividend growth of 21.28 percent. The projected yield in 12 months is 1.87 percent.
4. Progressive Corp. (NYSE:PGR)
Progressive is an automotive insurance company that you may recognize from its iconic commercials (you know, the ones without the gecko). Shares of the insurer are actually down 2 percent for the year and are up just 11 percent over the past two years. Revenue and earnings both increased in 2013 — up 6.3 and 29 percent, respectively — but performance has lagged analyst expectations recently. Shares suffered a major selloff at the beginning of the year.
Progressive offers a dividend yield of 1.1 percent, and the analysts at Bloomberg project three-year dividend growth of 21.63 percent. The projected yield in 12 months is 1.65 percent.
5. SunTrust Banks Inc. (NYSE:STI)
Like many of its peers in the financial industry, SunTrust Banks has been on a tear over the past few years. SunTrust is a regional bank with a presence in the southeast. Shares are up 35 percent over the past year and up more than 61 percent over the past two years.
SunTrust offers a dividend yield of 1.01 percent, and the analysts at Bloomberg project three-year dividend growth of 31.73 percent. The projected yield in 12 months is 1.62 percent.
6. Regions Financial Corp. (NYSE:RF)
Regions is another financial services company that has both done well on the stock chart and is projected to increase its dividend dramatically in the coming years. Shares of Regions Financial are up 34.6 percent on the year and up 70.9 percent over the past two years. Like other banks, it suffered deeply during the financial crisis, but investors have profited handsomely on its recovery.
Regions offers a dividend yield of 1.13 percent, and the analysts at Bloomberg project three-year dividend growth of 54.67 percent. The projected yield in 12 months is 1.7 percent.
7. Citigroup Inc. (NYSE:C)
Citigroup is yet another financial services company, and its story is similar to both Regions and SunTrust. Its growth on the stock chart, however, has been somewhat slower, as it’s had a more difficult time recovering from the crisis. Shares are up 13.6 percent on the year and 44 percent over the past two years.
Citigroup currently offers a dividend yield of just 0.08 percent, but the analysts at Bloomberg project three-year dividend growth of 216.65 percent. The projected yield in 12 months is 1.16 percent.
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