Meta Platforms and Salesforce stole most of the recent dividend thunder this year thanks to their surprise decisions to start making quarterly payouts to investors. But a group of the Club’s existing dividend payers also boosted their distributions in 2024, offering signs of confidence in their businesses. The hikes also sweeten the potential total return for their stocks at a time when some Wall Street strategists are shining a light on that performance metric. Seven of our dividend-paying companies announced bumps to their payouts, led by Disney , which in February lifted its semi-annual payout by 50%, to 45 cents a share, only a few months after it reinstated its dividend after a pandemic-related pause. Meanwhile, TJX Companies and Danaher disclosed 12.8% and 12.5% increases to their quarterly dividends, respectively. Eaton Corp. , Linde , DuPont de Nemours , and Coterra Energy round out the list of dividend hikers to date — though other Club holdings with track records of annual increases, like Procter & Gamble , are expected to follow in the coming months. DuPont’s distribution date is Friday, while the others are slated for the coming weeks. Investors should generally welcome dividend payouts even if the annualized yield is fairly small and not the primary reason for owning a stock. The reason is that reinvesting the money in the stock to accumulate more shares unlocks the magic of compound returns , increasing what’s known as “total return.” That performance metric captures not just stock price moves but also gains from reinvested dividends. Steady dividend growth — combined with stock price appreciation — improves total return over time. And when it comes to investing, total return is what really matters. Additionally, investors typically view dividend increases as a healthy sign for the company, assuming that management would only commit to a higher payout if it had the cash flows to support it. Note: Disney’s dividend is paid out semi-annually, rather than quarterly. Some on Wall Street see dividends growing in importance. “We believe that we are now in a total return world in which the contribution of dividends to total market returns could be significantly higher than it was in the last decade, a period marked by falling cash yields and lofty price returns,” Bank of America strategists led by Savita Subramanian wrote in a note to clients Thursday. The difference between stock price performance and total return can be substantial, underscoring the benefits of reinvesting dividends. Consider that over the past 10 years, Linde’s stock price has climbed 260%, according to FactSet. In the same period, the cumulative return for Linde, which has raised its dividend in 31 consecutive years, is a much larger 337%. Eaton’s stock price has climbed 321% over the past decade while its total return is 462%. Despite our strong recommendation that members reinvest their dividends, the Club is unable to practice what we preach as a charitable trust. All dividend payouts collected and realized capital gains are distributed to charity at year-end. We made our 2023 donation, which totaled $157,459, this week. Since its inception, Jim Cramer’s Charitable Trust has donated about $4.3 million. Currently, 27 of the Club’s 32 stocks pay dividends, including Meta Platforms and Salesforce, which made the unexpected announcements to begin doing so alongside their most recent earnings reports. The exceptions are Amazon , Google parent Alphabet , Palo Alto Networks , Bausch Health , and Foot Locker , which last year paused its quarterly payout amid its turnaround efforts. Some Club holdings raised their dividends in December, including Abbott Laboratories , Broadcom , and Eli Lilly . Also in December, Costco Wholesale announced its long-awaited special dividend, which came in at $15 a share and was paid out on Jan. 12. Ford Motor in February joined the special-dividend party, announcing a payout of 18 cents per share that was received earlier this month. Ford’s base dividend of 15 cents a share has been in place since the summer of 2022. Who could be next Not every company raises its dividend annually. Nvidia , for example, has kept its very small quarterly payout — equal now to a 0.02% annualized yield — steady for the past few years. Others like Procter & Gamble have developed a track record of increases. Cincinnati-based P & G has raised its dividend for 67 straight years, and the consumer products giant is widely expected to do so again this spring. The company typically announces its raises in April. P & G has long been designated a dividend aristocrat, a crown given to companies that have raised their dividends annually for at least 25 years in a row. Linde and Stanley Black & Decker are also in that camp. Apple doesn’t match P & G’s reputation as a dividend payer, but since resuming payouts in 2012, the iPhone maker has been known to increase it annually in late April or early May. Costco also has historically bumped its base dividend payout in April. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
People walk outside of the New York Stock Exchange (NYSE) on September 05, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
Meta Platforms and Salesforce stole most of the recent dividend thunder this year thanks to their surprise decisions to start making quarterly payouts to investors.
But a group of the Club’s existing dividend payers also boosted their distributions in 2024, offering signs of confidence in their businesses. The hikes also sweeten the potential total return for their stocks at a time when some Wall Street strategists are shining a light on that performance metric.
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