3 Dividend shares for November 2024

David Harrell: Hello. I’m David Harrell, editor of the magazine Morningstar DividendInvestor newsletter. In this monthly series, we look at the dividend prospects of three stocks that are popular with income investors.

Campbell CPB Soup
Diageo DEO
Enbridge ENB

Campbell Soup yields about 3.2% and trades at a 25% discount to Morningstar’s fair value estimate. But recent growth in its dividend has been remarkably modest, at 1.1% annualized over the past five years, and there have been several long stretches in which Campbell has kept its dividend unchanged. However, Morningstar analysts expect more increases in the future, predicting that the dividend will rise from the current annual rate of $1.48 per share to $2.17 over the next five years. In a recent analyst note, they addressed Campbell’s acquisition strategy, saying, “We expect the company to continue to exercise discretion in its pursuits and do not anticipate any potential deals that would burden its ability to return excess cash to shareholders while maintaining a dividend. the payout ratio is about 50%.”

Headquartered in London, Diageo is one of the world’s largest producers of alcoholic beverages. The company was formed as a result of the merger of Guinness and Grand Metropolitan in 1997. Its brands included Johnnie Walker whiskey, Smirnoff vodka and Captain Morgan rum. Like many non-US firms, Diageo pays a semi-annual dividend – an interim payment in April and a final dividend in October. According to the company’s investor website, the approximate split is 40/60, with the larger portion to be paid out in October. Based on recent interim and final payments, ADR shares are currently yielding 3.2% and are trading at a roughly 15% discount to Morningstar’s fair value estimate. Diageo pays out about 50% of its earnings in dividends, and analysts at Morningstar predict the dividend will grow by about 14% through 2028. Thanks to a tax treaty with the UK, US investors are usually exempt from withholding tax on dividends paid by the UK. firms, but there may be fees associated with each dividend payment. For more information, please contact your tax advisor.

Enbridge is a mid-sized Canadian energy company. In its base currency, the Canadian dollar, it has increased its dividend for 29 consecutive years, including annual increases of around 3% in each of the last four years. However, currency-adjusted payouts received by US investors have not always followed the same trajectory due to the relative strength of the US dollar. The total amount of dividends per share that US investors received in 2023 was about 1.1% lower than in 2022. In 2024, it looks like US investors will receive about 2% more dividends per share than in 2023. Additionally, while quarterly dividends are fixed in the base currency, the amount received by US investors will fluctuate quarterly due to exchange rates. Based on current rates, the stock yields about 6.4% and is trading in line with Morningstar’s fair value estimate of $41 per share. Please note that US investors pay a 15% tax on dividend payments that may be refunded. Again, consult your tax advisor for details.

I’m with David Harrell Morningstar DividendInvestor. Thanks for viewing. See you next month.

Watch 3 Dividend shares for October 2024 more in this series.