3 Dividend Stocks That Hiked Their Dividends This Month

These three dividend stocks from different industries offer good return potential over the next three to five years.

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Here are three dividend stocks that raised their dividends this month. From their dividends alone, long-term investors can make stable returns, irrespective of what their stock prices do.

A cyclical dividend stock with big upside potential

Magna International (TSX:MG) is a large global supplier of auto parts that is involved in the designing and manufacturing process. It has about 343 manufacturing operations and 88 product development, engineering, and sales centres that span 29 countries.

Management has demonstrated its commitment to its dividend, which it has increased for 13 consecutive years. However, investors should note that the company’s earnings are cyclical. For example, from the 2020 pandemic year to 2021, it doubled its net income. But last year, it lost 60% of its earnings year over year. These massive ups and downs of its profits make the stock volatile and unpredictable. Therefore, it tends to maintain a low payout ratio through economic cycles to provide a big buffer for when there are big cuts in its earnings.

It just raised its dividend by 2.2% this month. Its payout ratio is estimated to be about 40% of earnings this year. At $73.69 per share at writing, it offers a safe yield of about 3.4%. Combined with potential capital gains, the dividend stock can potentially deliver annualized returns of more or less 17% over the next few years.

goeasy stock

goeasy (TSX:GSY) is a leading non-prime Canadian consumer lender that has made long-term investors super wealthy. For example, in the last decade, the dividend stock’s total return was about 29% per year — almost a 13-bagger!

Over time, it has expanded its offerings such that its consumer loan portfolio consists of unsecured lending, home equity loans, point-of-sale lending, and automotive financing. One has to wonder where its next leg of growth might come from.

A Bloomberg article from a year ago suggested that the company could be exploring international merger and acquisition opportunities in the United States and the United Kingdom. Regardless, goeasy seems committed to increasing its dividend. It just raised its dividend by 5.5% this month and currently offers a yield of 3.1%, which is not bad for its growth prospects.

Manulife stock

Life and health insurance company Manulife (TSX:MFC) just raised its common stock dividend by 10.6% this month. This very nice hike pushed its dividend yield to 5.5%, which should serve as a solid foundation for total returns.

At $26.63 per share at writing, the value stock trades at a cheap price-to-earnings ratio of about 8.5. It also trades at close to its book value of about $26.49 per share. It suggests that the market may have low expectations of the stock. So, it could be a good opportunity for investors seeking juicy income. Its payout ratio is estimated to be sustainable at approximately 44% of earnings this year.

Investor takeaway

Stocks that are able to increase their dividends healthily over time typically become more valuable over time. If you buy them at good valuations, you could get decent returns. All three dividend stocks introduced pay eligible dividends that are favourably taxed in non-registered accounts. That is, you’d pay lower taxes on them versus your job’s income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kay Ng has positions in goeasy. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy.

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