The Federal Reserve is considering cutting interest rates in the near future, and Citigroup believes it is time for investors to consider dividends.
– Regarding dividend trends, we expect the Fed's gradual shift toward a less restrictive interest rate policy will lead investors to diversify their investments, says Scott Kronert, chief strategist at Citi Research, according to Citi Research. CNBC.
The strategist expects more companies to add dividend payments as companies increasingly understand their appeal to investors.
According to a Citi strategist, S&P 500 dividends increased 5.2 percent last year, but consensus estimates from analysts suggest dividends could grow 6.5 percent in 2024 — a number Kronert says is still conservative. . He expects 10 percent growth in profits this year.
Growing trend
According to the strategist, 13 companies launched dividends in 2023, and 323 companies increased their dividends. Only 23 companies reduced their profits.
Most recently, Meta's board approved its first-ever dividend in February, while Alphabet announced Thursday that it will issue a 20-cent dividend for the first time in June.
Chronert found stocks in the S&P 500 that have the potential to increase dividend payments this year. The shares had to meet the following criteria:
- Buy recommendation from Citi Research
- It has paid a 3-year dividend at a compound annual growth rate of more than 5 percent
- Expected earnings growth is above average
- Potential upside to greater profits
- Reasonable payout ratio
- Reasonable dividend yield
These stocks met the criteria:
Sheep research
Semiconductor company Lam Research entered the list, with a dividend yield of 0.9 percent. Earlier in April, B. Riley upgraded the company to a buy rating, saying they were more confident in the company's earnings growth potential.
Lam Research's share is up about 19 percent so far this year. The company reported better-than-expected third-quarter results and revenue last week, while also providing a strong outlook for revised results for the current quarter.
MasterCard Credit Card
MasterCard Credit Card It currently has a dividend yield of 0.6 percent. Analysts are overwhelmingly bullish on the stock and expect a 12 percent upside.
Earlier this month, TD Cowen initiated coverage of Mastercard with a buy rating. Analyst Brian Bergin said he believes international markets, especially Asia and Europe, should drive growth opportunities for the company.
Mastercard's share is up 7 percent so far this year. The company announces its quarterly results before the stock market opens on Wednesday.
Our opinion
competitor Our opinion, currently has a dividend yield of 0.7 percent. The credit card company has a Buy rating from most analysts covering the stock, with an average price target giving an upside of 13 percent.
Visa shares rose last week after the company reported better second-quarter results. The company reported adjusted earnings of $2.51 per share on revenue of $8.78 billion, higher than the $2.44 per share on revenue of $8.63 billion that analysts had expected.
Visa's share is up about 5 percent so far this year.
“Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff.”
