3 Dividend Stocks for March 2024

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

3 Dividend Stocks for March 2024

1. Coca-Cola KO
2. Texas Instruments TXN
3. Eastman Chemical EMN

Coca-Cola recently declared a quarterly dividend of $0.485 that will be paid April 1. This is a 5.4% increase from the previous rate, and it brings the stock’s yield to 3.2%. It also extends the company’s streak of annual dividend increases to 62 years. Over the next five years, Morningstar analysts expect the dividend payment to grow in line with earnings growth, which they forecast in the mid- to high-single-digit range, and for the dividend payout ratio to stabilize around 70%, which they view as prudent. Coke currently trades roughly in line with its Morningstar fair value estimate.

Following a 4.8% dividend increase for its final payout of 2023, Texas Instruments now yields 3.2%, substantially more than the yields of competitors such as Analog Devices ADI and Microchip Technology MCHP, while the stock trades at a 12% premium to its Morningstar fair value estimate. However, last year brought an end to a long streak during which Texas Instruments’ year-over-year increase in total dividends paid exceeded 10%. Looking ahead, dividend growth is likely to be more modest, with Morningstar analysts forecasting 6.8% annualized growth through 2028.

Eastman Chemical has increased its dividend at an annualized rate of 8% over the past five years, including a 2.5% raise for its most recent payout, and the stock currently yields around 3.7% while trading at a 30% discount to its Morningstar fair value estimate. In assessing Eastman’s financial strength, Morningstar analysts note that, given its strong free cash flow generation, they believe Eastman will have no trouble meeting its financial obligations, including dividends. Future dividend growth is likely to be more modest than seen over the past five years, however, as Morningstar analysts forecast annualized growth of 5.0% through 2028.

I’m David Harrell from Morningstar DividendInvestor. Thanks for watching, and we’ll see you next month.

Watch 3 Dividend Stocks for February 2024 for more from David Harrell.