Why So Many Dividend Stocks Are Hiking Their Yields Right Now

On Wednesday, the U.S. Federal Reserve held interest rates at a range of 1.5% to 1.75%. And rates are likely to go lower, not higher, in the months ahead.

If you're looking for fixed income from your investments, it's clear the Federal Reserve wants to limit your options.

But it can't lower the yields on our top dividend-paying stocks this week. In fact, our top pick today just raised its dividend 25%.

These companies recognize that low interest rates can attract investors. That's why they're hiking their dividends and returning gobs of cash to investors. Let's take a look at several of the recent dividend hikes during earnings season.

This first dividend stock has been raising its dividend for 25 consecutive years, and it's not stopping now...

Chevron Hikes Its Yield

This week, Chevron Corp. (NYSE: CVX) announced its largest dividend hike since 2013. The firm announced a quarterly dividend of $1.29 per share, or $5.16 annualized. The firm plans to go ex-dividend on Feb. 14 and will only pay shareholders of record from Feb. 18. It will make these payments on March 10.

Chevron will report earnings on Friday. Many investors are somewhat nervous about the company's report. Following the quieting of geopolitical tensions between the United States and Iran, oil prices have slumped. That decline has compounded due to the China coronavirus and increasing concerns about slowing growth in the world's second largest economy.

Chevron's recent dividend hike, however, aims to encourage investors to remain with the company and enjoy the 4.7% yield while the global economy attempts to heal.

The company behind Taco Bell and Pizza Hut also just announced a massive quarterly dividend hike...

Yum! Brands Boosts Dividend

Yum! Brands Inc. (NYSE: YUM) said it will pay out $0.47 to shareholders on March 6, 2020.

That dividend represents a 12% hike from its common payout. The new dividend puts the annual yield at 1.8%. If the future follows recent history, more increases to its yield could come in the months and years ahead. Last February, the firm announced plans to increase its dividend from $0.36 to $0.42. That spread represents a 17% jump.

Yum has benefited from a more robust capital structure, cost cutting, and efforts to return cash to investors. The firm said it will return an additional $6.5 billion to $7 billion in the next three years through a combination of buybacks and dividend payouts.

But this next company continues to raise its dividend a whopping 25%. It's our best dividend stock today.

Take Your Share of Pipeline Profits

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Energy giant Kinder Morgan Inc. (NYSE: KMI) is looking quite strong these days. With more than 83,000 miles of pipeline across North America, it is poised to continue its reign as a top midstream infrastructure company.

The company has returned to its roots as being one of the most aggressive dividend payers in the market. The firm hiked its yearly dividend by 25% in 2018, 2019, and 2020. That represented a quarterly boost from $0.125 to $0.3125.

Dividend hikes are very attractive in the midstream energy business. KMI increased its dividend by 70% over the 18 quarters between July 2011 and October 2015. However, a downturn in energy prices mixed with weakening demand fueled a downturn in 2016. Look for KMI to attract more investors as it pushes back toward the $30 level in the next 12 to 18 months.

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About the Author

Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

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