If you want to collect a lot of dividend income, it isn’t just about which stock offers a high yield. That can be important, but it’s also crucial to consider stocks which may increase their payouts over time, as that can offset the effects of inflation and provide you with an incentive to hold for the long term.
One stock which recently increased its dividend payment by a fairly sizeable 7% is Keurig Dr Pepper (NASDAQ:KDP). On Sept. 12, the company announced it was going to increase its dividend from an annualized rate of $0.86 to $0.92. With the updated dividend, the stock is now yielding 2.4%, which is higher than the S&P 500 average of 1.3%. What’s encouraging about the stock is that it has a payout ratio of less than 60%. That means there’s plenty of room for the company to increase its dividend payments even higher.
The beverage company has been doing well despite challenging macroeconomic conditions. Sales through the first half of the year are up 3.5% when compared to 2023, and the company’s diluted earnings per share has also risen by 1.4%. Those aren’t high growth numbers but the company is still doing well, and that consistency can be valuable to income investors who are looking for a good stock to buy and hold right now.
Year to date, shares of Keurig Dr Pepper are up 13% and the stock trades at 18 times next year’s earnings. It could be a great stock to buy, especially if you’re in need of some reliable dividend income.