It’s looking more likely that the stock market could head sideways for some time, making dividends a more important part of the equation for portfolio returns.
Dividend investing comes in various forms. Investors can look for stocks that offer the highest yield, names with a history of stable dividend payouts and strong finances, or companies that are raising dividends.
For this article, we screened for stocks that have increased their quarterly dividends, which can be a sign of a company’s confidence in its future finances. We combined this screen with one for stocks that are trading below their Morningstar fair value estimates, meaning they have attractive prices for long-term investors. These stocks offer investors the potential to benefit from both increased dividend yields and the possibility that their investment values will grow.
We started with the 654 U.S.-based companies covered by Morningstar that pay a quarterly dividend to investors. We then tracked changes between any dividends paid during the first quarter of 2023 and the most recent dividends for the second quarter.
From there we filtered for companies that saw a dividend increase of 5% or more to capture the most substantial changes. Stocks with dividend yields under 2% were then excluded from the group. After that we picked companies considered undervalued by Morningstar analysts, meaning they are rated 4 or 5 stars.
Only six companies made the cut.
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