Dividend Stocks

The Dividend Duchesses: 3 Stocks That Will Grace Your Portfolio with Royal Returns

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Dividend income, particularly when it is reinvested, can really add up over time.

Many of the world’s best investors are focused on dividend payouts and use them to build their portfolio. Look at Warren Buffett’s investment in Coca-Cola (NYSE:KO). The Oracle of Omaha will earn $784 million this year in dividend payments on the 400 million shares of KO stock that he owns.

Coca-Cola is one of 47 stocks Buffett currently holds in his massive investment portfolio. Dividend payments are largely responsible for the fact that Buffett is siting on a cash pile that is expected to surpass $200 billion by the end of the current second quarter. This illustrates how dividends can accrue over time and help to compound a portfolio. While dividends shouldn’t be the only consideration when buying a stock, its worthwhile to keep them in mind.

Let’s delve into three dividend duchesses that will yield generous returns to your portfolio.

Casey’s General Stores (CASY)

Image of Casey's General Store logo on side of a store

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Casey’s General Stores (NASDAQ:CASY) has raised its quarterly dividend payment by 16.3% to 50 cents per share. The new dividend is up from a previous distribution of 43 cents. It will be paid to shareholders of record on August 1. The company, which operates a chain of convenience stores and gas stations in the U.S., announced the dividend increase along with strong financial results.

Casey’s reported EPS of $2.34, which was well ahead of analyst estimates of $1.74. Revenue in the quarter totaled $3.60 billion, which topped Wall Street forecasts of $3.45 billion. Management said that same-store sales rose 5.6% from a year earlier due to strong demand for the pizza and baked goods it sells. Casey’s had 2,658 stores at the end of the quarter. And it plans to open 100 new stores in the current fiscal year.

News of the dividend hike and strong earnings print sent CASY stock up 15% in one trading session. Casey’s stock is up 72% over the last 12 months.

American Express (AXP)

an American Express (AXP) credit card sticking out of someone's pocket

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At the start of this year, American Express (NYSE:AXP) lifted its quarterly dividend payment to stockholders by 17%. The credit card giant now pays a quarterly distribution of 70 cents per share, up from 60 cents previously. The increase brings American Express’ annual payout to shareholders to $2.80 per share. As with Casey’s General Stores, American Express hiked its dividend as it posts strong financial results.

For the year’s first quarter, American Express reported EPS of $3.33 compared to $2.95 that was anticipated by analysts. Revenue totaled $15.8 billion, which matched Wall Street expectations. Sales rose 11% from a year earlier. The company said that cardholder spending increased 7% from a year ago. As for guidance, AXP maintained its previous revenue growth forecast of 9% to 11% and a profit estimate of $12.65 to $13.15 per share.

AXP stock has been the top performer among credit card issuers, rising 30% over the last 12 months.

Devon Energy (DVN)

The logo for Devon Energy (DVN) is displayed on a sign outside an office.

Source: Jeff Whyte / Shutterstock.com

Investors who are simply chasing yield should consider Devon Energy (NYSE:DVN). Currently, the oil producer pays a quarterly dividend of 69 cents a share, giving it a yield of just under 6%. That’s one of the highest yields offered by any oil and gas company. Also, it’s among the highest of any publicly traded company. Along with the hefty dividend, investors get a stock that is trading at only eight times future earnings estimates.

DVN stock is only up 2% year-to-date (YTD), and it has underperformed many of its peers. Why? Devon Energy hasn’t found another company to acquire or merge with at a time when consolidation is booming among U.S. oil producers, particularly those with operations in the Permian Basin of Texas. A slump in crude oil prices hasn’t helped either. Even still, Devon Energy remains a leading and reliable oil stock. While investors wait for the stock to rebound, they can comfort themselves with the big dividend payout.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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