Many dividend paying stocks have been caught up in downdraft amid widespread sales following President Donald Trump’s announcement of tariffs on dozens of countries. However, dividend stocks could provide opportunities for long-term investors looking for performance and income in unstable markets.
Dividend investments are made in a variety of ways. Investors can increase stocks with the highest yield, stocks with a steady dividend payment and a strong financial history, or dividends. We screened US stocks covered by Morningstar, which increased quarterly dividends.
There are eight underrated companies that increased their dividends in March.
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Screening of undervalued US stocks that increased dividends
We started with a complete list of US-based companies covered by Morningstar analysts, looking for people to pay quarterly dividends, and declared dividend payments in March. It was filtered for companies that tracked changes from previous dividend payments and saw dividend increases of 2% or more to grasp the biggest changes. Stocks with dividend yields were excluded at less than 2%. Finally, we chose companies with a 4 or 5 star rating by Morningstar analysts. In other words, it is considered to be underestimated. These stocks offer investors the chance to benefit from an increase in dividend yields and the potential for growth in investment value.
Eight companies have passed through the screen. The full list of stocks covered by Morningstar, which raised its dividends in March, can be found at the bottom of this article.
Oracle
“Oracle believes it is fair in its allocation of capital to dividends and share repurchases. Oracle has consistently increased its annual dividend over the past decade and remains a key channel for Oracle’s shareholder distribution. In the decade since 2010, we believe that shareholders are worth arising from their continued internal investments, given their current setup.
– Luke Yang, equity analyst
Applied materials
“Applied Material’s balance sheet is strong, with net cash positions and long-term debt maturities. It also generates more free cash flow, most of which is sent back to shareholders. Since 2018, applied materials have increased their dividends each year, sending back to shareholders over 80% of their free cash flow, including buybacks.”
– William Kerwin, senior equity analyst
Toll Brothers
“In our view, the shareholder distribution of Toll Brothers was appropriate. Toll is one of the few public architects paying dividends. The company began paying modest dividends in 2017 (starting to pay around 9% on average); estimates of the inherent value of the stock.”
– Sector Director Brian Bernard
General dynamics
“We believe that the general dynamics deserves a proper shareholder distribution rating. The general dynamics is the only defence prime that has increased dividends for 25 years, and has historically provided considerable cash to shareholders. The company has provided cash to approximately $5.6 billion in shareholders through stock buybacks. This means that the diluted weighted average number of shares from 2018 to 22 can be expected to continue these activities given the stability of the shareholders and business model.
– Nicholas Owens, equity analyst
American Tower
“We believe that American Tower’s shareholder distribution history is appropriate. As a REIT, the US tower must distribute 90% of REIT taxable income. Dividends are the focus of management’s shareholder profit strategy, and since 2021, the company has increased its dividends by an average of 20%. The period has been kept to a minimum since 2017, with $1.1 billion spent on repurchase of shares compared to dividend payments, compared to dividend payments. The flexibility of the balance sheet allows management to buy back shares if it has value.”
– Samuel Sianpaus, equity analyst
FirstEnergy
“FirstEnergy dividend payments are projected between 60% and 70%, which I feel is appropriate given the high quality and relatively stable nature of FirstEnergy’s regulated utilities.”
– Andrew Bishop, Strategist
American Logistics
“We are assessing our capital revenue strategy as needed. Our current dividend of $0.22 per quarter represents approximately 60% of the company’s adjusted funds in 2024 from operations, which we consider to be at the right level for REITs.
—Suryansh Sharma, Senior Equity Analyst
Equity Residential
“We believe that, over the past few years, we averaged 70% of dividends of 70% of normalized funds from our businesses, and we believe this is a reasonable level of REIT, but we consider this to be an appropriate level of REIT as it was based on the operating level that returned to the business level that recovered from austerity in 2022.
– Kevin Brown, Senior Equity Analyst
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