Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
Retailer Costco Wholesale has taken the first spot on the list after the company raised its dividend. Second in the list is pharmaceutical giant Pfizer, which has been looking for its next growth opportunity amid falling sales for Covid-19 vaccines and questions about the sustainability of its dividend. Third in the list is British American Tobacco, which pays a high dividend. The list is closed by fast food giant McDonald’s.
Don’t forget to read our previous edition of trends here.
Costco Hikes Dividend by 15%
Costco Wholesale (COST) has taken the first position in the list with an advance in traffic of 63%. The company garnered views after it raised its dividend by around 13% to $1.16 per share. The company has been increasing its dividend for 21 consecutive years. The dividend will be paid on May 10 to shareholders of record as of April 26.
In addition to strong dividend growth, Costco’s stock price performance has been stellar, up 43% over the past 12 months. The solid performance comes on the back of ever-growing sales and profits. In the last fiscal quarter ended February, sales were up 5.75%, while net income rose around 19%.
The company is yet to tap into other growth avenues, as it plans aggressive expansion in countries like the U.S., the U.K. and China.
Source: Barchart
Pfizer’s Dividend at Risk Amid Falling Sales
Pfizer (PFE) has taken the second spot in the list with an increase in viewership of 11%.
Pfizer pays a dividend that yields more than 6% on a payout ratio of 62%. It has been increasing every year for the past 15 years. However, the company faces serious questions about whether its dividend is sustainable given the strong decline in sales in 2023. Faced with a rapid fall in Covid-19 vaccine sales, revenue tumbled from $100 billion to just $58 billion in 2023. Meanwhile, net income plummeted 93% to $2.12 billion.
As a result, the company is now looking for its next blockbuster medicines. It hopes that its partnership with Seagen will produce at least eight cancer therapies by 2030. However, this will take time to convert into revenues. Shares in Pfizer have lost 55% since peaking.
Source: Barchart
British American Tobacco’s High Dividend Yield
British American Tobacco (BTI) has taken the third spot, seeing viewership increase by 4%. The tobacco company has been rewarding shareholders with a 10% dividend yield, but its stock price performance leaves much to be desired — it is down 36% since peaking in early 2022.
Tobacco sales have experienced a steady decline over the years as consumers have become more conscientious. However, the company hopes that non-combustible e-cigarettes will take off. By 2035, its goal is to have 50% of its revenue coming from new smoking products. In 2023, e-cigarettes posted a small profit for the first time, an indication of the company’s progress in transforming this line of business into a steady money-maker.
The company’s dividend might be at risk, however, given that it represents more than half of earnings.
Source: Barchart
McDonald’s Sees Falling Sales
McDonald’s (MCD) is last in the list, seeing its viewership rise just 1%.
McDonald’s shares have fallen about 7% this year, partly as a result of falling sales. Revenues declined sequentially in the fourth quarter, with the company blaming the fall on a spending pullback by low-income consumers. Net income was also down from $2.32 billion to $2.04 billion. However, year-over-year, McDonald’s revenue and net income were still up by about 8% and 7%, respectively.
McDonald’s pays a dividend of $6.7 per share, with the current yield standing at 2.4%.
Source: Barchart
The Bottom Line
Costco has again increased its dividend, as the company’s sales continue to be strong. Pfizer’s dividend might be at risk if the company cannot find a quick way to boost revenues. British American Tobacco’s high dividend is also at risk. Finally, McDonald’s sales have softened as a result of a consumer pullback.
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