For most people, Dividend Aristocrats are the first group of dividend stocks that comes to mind when we think of dividend increases and hikes. But it’s wrong to assume that only Aristocrats grow their payouts.
Some companies are on their way to becoming Aristocrats, and even though they haven’t racked in the required number of years yet, you can benefit from a dividend bump by tracking such stocks and buying them at the right time (just before a dividend increase).
Many companies that had to grow their payouts already did it in their March payouts. Still, some stocks will increase their payouts from April 2023, and two such stocks are worth considering now.
A construction company
Bird Construction (TSX:BDT) has a long and proud history. It has been serving Canadian business and residential customers for over a century. It started out as a small Saskatchewan-based construction company and, over the course of 100 years, grew into one of the largest construction companies in Canada, although it’s among the small-cap stocks in the country.
The stock has fallen by about 30% in the last 10 years, though the overall returns have been positive thanks to the dividends. Still, it doesn’t deserve to be completely written off for its capital-appreciation potential, because its cyclical growth (short term) has been decent enough. One example would be its current bullish phase, which pushed the stock price up by over 57% in fewer than six months.
It’s a better buy for its dividends, especially now as the company is expected to raise its monthly payouts by about 10%. The $0.0325 payout will be beefed up to $0.0358 from April. The dividend yield is attractive enough right now (4.6%), and the payout ratio is quite healthy at below 42%.
A telecom giant
BCE (TSX:BCE) is the opposite of Bird Construction in many ways. Not only is it among the large-cap stocks currently trading on the TSX, but it’s also the largest telecom company by market cap. It’s also a well-established Dividend Aristocrat that has grown its payouts for 14 consecutive years.
The stock has experienced modest growth in the last decade and has risen by about 27%, though not consistently. Most of the fluctuation has been in the previous five years.
However, what the company lacks in capital-appreciation potential, it makes up for via its generous dividends. It’s already offering a juicy 6.3% yield and is raising its payouts (from the first quarter of 2023) by 5.2%. Its payouts in April will be $0.9675 instead of the $0.9200 last year.
The stock is trading at a discount of about 17%, but it’s not undervalued. However, as a generous dividend aristocrat and an industry leader, it’s a decent long-term holding.
It’s important to note that when you are buying a dividend payer for increased payouts, be sure to do it before the ex-dividend date. Otherwise, you may have to wait till the next distribution date to enjoy the increased dividends.