Let's Play Dividend Detective to Find Out Where to Uncover Good Yields

As we roll through June, we continue to learn of fresh cuts to expected quarterly dividends as the toll of the Covid-19 pandemic and the measures to slow its spread weigh on various business models. A few of the more recent cuts include commercial real estate-focused real estate investment trusts, Urstadt Biddle Properties , which dropped its quarterly dividend to $0.07 per share from $0.28, and investment company Arlington Asset , which focuses on residential mortgage-backed securities, which has opted to not declare a quarterly common stock dividend this quarter. Arlington's last common dividend to shareholders was $0.225 per share, but scanning back the last few years the company's annual dividend has been waning, not increasing, on a somewhat steady basis since late 2015. Prior to this dividend cut, the expected yield an investor stood to gain on AI shares was more than 20% while UBA shares offered one near 6.5% vs. the current 1.9%. The third is jewelry retailer Signet Jewelers , which announced it has opted to temporarily suspend its quarterly dividend of $0.37 per share. One question we as dividend and yield seeking investors must ponder is where can we uncover companies that are poised to not only continue meeting expected dividend obligations but furnish fresh dividend increases despite impact the pandemic has had on their businesses? The first step is to look for clues to determine which businesses have either seen little impact to their business model, are seeing their businesses rebound as we look to put the pandemic in rear view, or ones that, despite the pandemic, have strengthened. It means picking through a lot of company news, looking for hidden gems and nuggets. Fortunately for us, even though we are just a few weeks shy of closing out the current quarter and entering the corporate quiet period before the next iteration of earning season is upon us, a growing number of companies are sharing an updated outlook and it's not all bad, and in some cases it is far better than feared. Citing stronger growth in its U.S. consumer segment, lawn, and garden product company Scotts Miracle-Gro upped its 2020 revenue and earnings per share forecast this week. The company now sees EPS in the range of $5.65-$5.85 vs. its prior guidance of $4.95-$5.15 and the $5.40 consensus. For its U.S. consumer segment, Scotts now forecasts growth of 9%-11% vs. its prior view of $1%-3%. Consumer purchases of our products at our largest four retail partners were up 44 percent in May, and we are now up approximately 19% year-to-date at the time of this announcement, said the company. Scotts has grown its quarterly dividend over the last 10 years, and Wednesday marks the payment date for its fourth $0.58 per share installment. If history holds, we could see the company bump its dividend by a few pennies per share to $0.60-$0.61 per share. While that would improve its dividend yield the reality is the new dividend yield would only be around 1.7%. Good, but not exactly compelling. Citing demand, production, and cost trends in April and May that were more favorable than previously anticipated, paper and tissue manufacturer Clearwater Paper raised its June quarter guidance this week. Readers, especially those who have trolled grocery store aisles during the pandemic in search of toilet paper will not find this news surprising. As good as that news is, the fact that Clearwater doesn't pay a dividend is a non-starter for us. Here's the thing, that level of demand is across the board and bodes rather well for S&P 500 Dividend King Procter & Gamble . Currently the shares offer a yield near 2.7%, well above the yield to be had with the S&P 500 and Procter has been increasing its dividend continuously over the last 63 years. The same is true for paper products company Kimberly Clark , whose shares currently sport a yield of almost 3.1%. Recently fast food company Wendy's shared its total total May comps rose to negative 3.3% from April's negative 15.3%, with its U.S. comps improving to negative 1.9% in May from negative 14.0% in April. Over the last few quarters, Wendy's quarterly dividend has been all over the map, and that lack of predictability isn't something we income-seeking investors are likely to be fans of. But if Wendy's is seeing such a pronounced rebound in its business, it more than likely means fast food champ and S&P 500 Dividend Aristocrat McDonald's is, as well. One piece of anecdotal evidence to share -- nearly every night the several McDonald's stores near me are seeing extensive lines at their drive-thrus, and I suspect those in line aren't even aware of the 2.5% yield to be had with the shares. I suspect the coming weeks will bring us similar updates that will help us zero in on the dividend cream to be had. Stay tuned.

Let's Play Dividend Detective to Find Out Where to Uncover Good Yields

While many companies are cutting their dividends, others are holding strong and some are poised to see increases. Here's how to spot the good opportunities.

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