4 Stocks in Focus That Recently Announced Dividend Hikes

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Wall Street has rallied over the past week, fueled by optimism following Donald Trump’s landmark victory in the U.S. Presidential election. All three major indexes hit new all-time highs, with the Dow and the S&P 500 crossing 44,000 points and 6,000 points for the first time earlier this week.

Also, a 25-basis point rate cut by the Federal Reserve last week has been boosting investors’ sentiment. However, there are several factors that could turn markets volatile again once the post-election enthusiasm subdues.

Given this situation, cautious investors looking for a steady income and safeguarding their capital may look to hold or buy dividend-paying stocks. Four such stocks are Snap-on Incorporated SNA, Griffon Corporation GFF, Churchill Downs Incorporated CHDN and Roper Technologies, Inc. ROP.

Inflation Ticks Higher

The Federal Reserve’s benchmark policy rate is now in the range of 4.5-4.75% after it cut interest rates by 50 and 25 basis points in September and November, respectively. The Federal Reserve believes that inflation is on track to reach its 2% target after declining substantially over the past year.

However, fresh data released on Wednesday shows that the consumer price index (CPI) rose 0.2% sequentially in October and 2.6% from year-ago levels, up 0.2% from September. Core CPI, which excludes volatile food and energy costs, rose 0.3% month over month in October and 3.3% annually.

Cautious Approach After Election

The Dow jumped more than 1,500 points the day after Trump won the election. The Fed’s rate cut fueled the rally, sending all three indexes on a new high. The recent rally is being driven by optimism surrounding lower taxes and lighter regulations under the Trump administration, as the president-elect is being seen as someone who openly addresses issues like the stock market and the dollar.

However, the rally has stalled over the past couple of days as investors are reassessing the situation following the release of the inflation data.

Also, market participants are worried about a significantly slower rate of future interest cuts due to robust macroeconomic data released earlier this month.

Also, geopolitical tensions in the Middle East continue to keep investors concerned about a full-scale war between Israel and Iran.

Stocks That Declared Dividend Hikes

Given this scenario, investing in dividend-paying stocks would be a wise choice. These companies maintain strong operations and consistently provide dividends, remaining profitable on account of their reliable business models. In a highly volatile market, companies that offer high dividend payouts tend to outperform those that do not pay dividends.

Snap-on Incorporated

Snap-on Incorporated is a global provider of professional tools, equipment, and related solutions for technicians, vehicle service centers, original equipment manufacturers and other industrial users. SNA’s products include a broad range of professional hand and power tools; vehicle diagnostics and service equipment; business management systems; and other tool and equipment solutions. SNA presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

On Nov. 8, Snap-on Incorporated announced that its shareholders would receive a dividend of $2.14 a share on Dec. 10, 2024. SNA has a dividend yield of 2.06%. Over the past five years, Snap-on Incorporated has increased its dividend six times, and its payout ratio at present sits at 39% of earnings.Check Snap-on Incorporated’s dividend history here.

Snap-On Incorporated Dividend Yield (TTM)

Snap-On Incorporated dividend-yield-ttm | Snap-On Incorporated Quote

Griffon Corporation

Griffon Corporation is a diversified management and holding company conducting business through wholly-owned subsidiaries. GFF oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. GFF has a Zacks Rank #3 (Hold).

On Nov. 13, Griffon Corporation declared that its shareholders would receive a dividend of $0.18 a share on Dec. 18, 2024. GFF has a dividend yield of 0.88%. Over the past five years, Griffon Corporation has increased its dividend eight times, and its payout ratio at present sits at 12% of earnings.Check Griffon Corporation's dividend history here.

Griffon Corporation Dividend Yield (TTM)

Griffon Corporation dividend-yield-ttm | Griffon Corporation Quote

Churchill Downs Incorporated

Churchill Downs Incorporated, the world's most legendary racetrack, has conducted Thoroughbred racing and presented America's greatest race, the Kentucky Derby. CHDN has Five racetracks; Six casinos; Big Fish Games, the world's largest distributor of casual games; The country's leading online wagering business, TwinSpires.com; A video poker business, A multi-state network of off-track betting facilities; and a collection of racing-related data, totalisator and telecommunication companies that support CDI's sports and gaming operations. CHDN has a Zacks Rank #3.

On Nov. 13, Churchill Downs Incorporated announced that its shareholders would receive a dividend of $0.41 a share on Jan. 3, 2025. CHDN has a dividend yield of 0.27%. Over the past five years, Churchill Downs Incorporated has increased its dividend six times, and its payout ratio at present sits at 7% of earnings.Check Churchill Downs Incorporated’s dividend history here.

Churchill Downs, Incorporated Dividend Yield (TTM)

Churchill Downs, Incorporated dividend-yield-ttm | Churchill Downs, Incorporated Quote

Roper Technologies

Roper Technologies, Inc. manufactures and distributes software and technology-enabled products and solutions. ROP caters to selected segments of a broad range of markets, which include legal, healthcare, government, food, transportation, oil & gas, medical, and other niche industries. ROP has a Zacks Rank #2.

On Nov. 8, Roper Technologies declared that its shareholders would receive a dividend of $0.83 a share on Jan. 17, 2025. ROP has a dividend yield of 0.53%. Over the past five years, Roper Technologies has increased its dividend six times, and its payout ratio at present sits at 17% of earnings.Check Roper Technologies’ dividend history here.

Roper Technologies, Inc. Dividend Yield (TTM)

Roper Technologies, Inc. dividend-yield-ttm | Roper Technologies, Inc. Quote

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Spectrum Brands Raises Quarterly Dividend: What it Means for Investors

Zacks

Spectrum Brands Holdings, Inc. SPB announced an increase in its quarterly dividend, raising it to 47 cents per share from the previous 42 cents. This 12% hike underscores Spectrum Brands' commitment to delivering consistent value to its shareholders through dividend increases.

Scheduled to be paid on Dec. 17, 2024, to its shareholders of record as of Nov. 26, 2024, this is a milestone in Spectrum Brands' tradition of rewarding its investors with dependable dividends. With this adjustment, the company's annualized dividend rate now stands at $1.88 per share, translating to an attractive yield of 2% based on yesterday's stock.

Spectrum Brands' strategy of regularly increasing dividend not only bolsters shareholder income but also reinforces investor confidence in the company's financial health and stability. Such shareholder-friendly actions are crucial in attracting long-term investors who prioritize consistent returns.

These strategic actions not only enhance shareholder value but also elevate the stock’s market appeal. By increasing dividends, companies effectively encourage investors to buy or hold their shares. The decision to raise dividends reflects the company’s robust financial position and capacity to generate substantial cash flow, reinforcing its commitment to delivering consistent returns to investors.

This announcement precedes Spectrum Brands' upcoming fourth-quarter fiscal 2024 results, scheduled for release on Nov. 15, before the opening bell. Spectrum Brands’ fourth-quarter fiscal 2024 results are expected to benefit from pricing actions, cost efficiencies, volume-driven returns across all three segments and a favorable product mix all expected to have contributed to improved margins.

Insights Into SPB's Initiatives

Spectrum Brands has been proactive in its cost-takeout actions, implemented in the second half of fiscal 2022, including fixed cost reduction by eliminating permanently salaried headcount and reducing advertising and promotional spending. It is focused on a disciplined cost structure.

Spectrum Brands is progressing well with its Global Productivity Improvement Plan, which aims at improving the company's operating efficiency and effectiveness while focusing on consumer insights and growth-enabling functions, including technology, marketing, and research and development. The majority of the savings are expected to be reinvested into growth initiatives and consumer insights, R&D and marketing across each of the businesses. This plan will also enable the company to deliver value creation and sustainable growth in the long term.

The Zacks Consensus Estimate for fourth-quarter fiscal 2024 revenues is pegged at $740.1 million, suggesting a decrease of 0.09% from the prior-year quarter’s reported figure. However, we note that the consensus mark for earnings has moved down by 2 pennies to $1.13 per share over the past 30 days.

Shares of this Zacks Rank #4 (Sell) company have gained 2.9% in the past three months against the industry’s decline of 1.8%.

Three Picks You Can’t Miss

Some better-ranked stocks from the Consumer Discretionary sector are Traeger, Inc. COOK, Unicharm Corporation UNICY and Snap-on Incorporated SNA.

Traeger, the creator and category leader of wood pellet grills, carries a Zacks Rank #2 (Buy) at present. COOK has a trailing four-quarter negative surprise of 41.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Traeger’s current financial-year earnings indicates growth of 127.3% from the year-ago corresponding figure.

Unicharm is a manufacturer and seller of baby and child care, feminine care, healthcare, cosmetics, household and pet care products. It currently has a Zacks Rank 2. UNICY has a trailing four-quarter negative surprise of 6.4%, on average.

The Zacks Consensus Estimate for Unicharm’s current financial-year sales indicates a decline of 1.9% from the year-ago reported figures.

Snap-on, a global provider of professional tools, equipment and related solutions for technicians, vehicle service centers, original equipment manufacturers and other industrial users, presently carries a Zacks Rank #2. SNA has a trailing four-quarter earnings surprise of 1.6%, on average.

The Zacks Consensus Estimate for Snap-on’s current financial year’s earnings indicates growth of growth of 3%, from the year-ago period's reported numbers.

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SNA Hits 52-Week High: Can Growth Initiatives Further Drive the Stock?

Zacks

Shares of Snap-On Incorporated SNA hit a new 52-week high of $365.35 on Nov. 13, 2024, before dropping to close trading at $361.26. SNA has seen its shares rise steadily in the past three months, driven by progress on its growth initiatives.

In the past three months, Snap-On shares have rallied as much as 30.8% compared with the broader industry’s 16.4% rise and the Zacks Consumer Discretionary sector’s 14.4% growth. The stock also outpaced the S&P 500’s rally of 8.3% in the same period.

SNA's 3-Month Stock Performance

The company’s growth is driven by efforts to strengthen the franchise network, build better relationships with repair shop owners and managers, and expand into key industries in emerging markets. Management’s focus on the Rapid Continuous Improvement (RCI) process remains on course.

The Snap-On stock is trading above its 50-day and 200-day moving averages, signaling strong upward momentum and price stability. This technical strength indicates positive market sentiment and confidence in the global professional tools, equipment, and related solutions provider’s financial health and prospects.

Now, what should your next move be? Should you accumulate shares, hold positions or book profits? Before arriving at any decision, let us explore the company's underlying fundamentals.

Breaking Down SNA’s Formula for Market Success

Snap-on’s robust business model enhances value creation by improving safety, service quality, customer satisfaction and innovation. The company is dedicated to various principles and processes aimed at creating value in areas like RCI. The RCI process is designed to enhance organizational effectiveness and minimize costs while boosting SNA’s sales and margins, and generating savings.

Savings from the RCI initiative reflect productivity gains from ongoing process improvement. Management is committed to enhancing customer service, and manufacturing and supply-chain capabilities through RCI initiatives and further investments. Snap-On’s focus on innovation is also promising, with continuous investments in new products and increasing global brand awareness.

Positive trends among vehicle OEMs, dealerships and independent repair shops are driving investments in tools and equipment, likely expanding capabilities to support new models and the complexity of repairs. Snap-on’s Repair Systems & Information Group has strengthened its reach into OEM dealership programs and independent garages, highlighting solid growth potential and opportunities with repair shop owners and managers.

The economic outlook for vehicle repair remains positive, supporting Snap-on’s growth. The company continues to invest in tools and equipment to enhance its ability to support new models and manage complex repairs. SNA’s RS&I Group has extended its reach in OEM dealership programs and strengthened its presence in independent garages, positioning it well to attract repair shop owners and managers.

The Tools Group segment is prioritizing product development, manufacturing improvements and sales efforts for the near term. Critical industries remain robust, presenting various opportunities, while torque tools are gaining importance among critical industry clients. The industrial division is performing strongly, with rising profitability and growing demand for customized solutions, which will likely drive sales and profits.

Management expects SNA’s markets and operations to remain resilient despite uncertainties in the broader operating environment. For the remainder of 2024, Snap-On anticipates steady progress on its growth pathways, leveraging strengths in automotive repair and expanding its customer base across key industries and regions.

SNA’s Estimates Indicate Uptrend

The Zacks Consensus Estimate for Snap-On’s 2024 and 2025 EPS moved up 0.5% and 0.9%, respectively, in the last 30 days. The upward revision in earnings estimates indicates a bullish outlook for the stock.

For 2024, the Zacks Consensus Estimate for SNA’s EPS implies 3% year-over-year growth. The consensus mark for 2025 sales and earnings indicates 3.2% and 3.6% year-over-year growth, respectively.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Could Challenges Be Ahead for Snap-On’s Growth?

Although Snap-On sees favorable trends across most markets, it could succumb to tough macroeconomic conditions. These include inflationary pressures and other headwinds. Delayed financial recovery in China is acting as a deterrent.

Rising cost inflation, stemming from higher raw material expenses and other costs, is another headwind hurting SNA’s performance.

What Does SNA’s Valuation Imply?

With the stock steadily ticking up, Snap-On is trading at a forward 12-month P/E multiple of 18.17X, slightly exceeding the industry average of 18.16X but below the S&P 500’s 22.63X multiple. At current levels, Snap-On’s stock valuation looks slightly more expensive than its peers.

The premium valuation suggests that investors have strong expectations for Snap-On’s future performance and prospects. While success in its initiatives could further strengthen its market leadership, failure could pose serious challenges for the company.

How to Play SNA Stock?

Snap-On shows strong long-term growth potential, driven by ongoing initiatives. Management expects steady progress by leveraging strengths in automotive repair, expanding its customer base across regions and targeting critical industries. The company remains confident in its resilience to market uncertainties and anticipates progress along its defined growth pathways.

Although trading at a slight premium to its peers, the stock’s valuation marks an attractive entry point. For existing shareholders, holding onto the stock could yield strong long-term returns. SNA currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Consumer Discretionary Picks

We have highlighted three other top-ranked stocks, namely Ralph Lauren RL, Under Armour UAA and Gildan Activewear GIL.

Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia, and internationally. It carries a Zacks Rank #2 at present.

Ralph Lauren has a trailing four-quarter earnings surprise of 9.1%, on average. The Zacks Consensus Estimate for RL’s current fiscal-year sales and earnings indicates growth of 3.5% and 13.6%, respectively, from the year-ago reported figures.

Under Armour is one of the leading designers, marketers and distributors of authentic athletic footwear, apparel and accessories for a wide variety of sports and fitness activities in the United States and internationally. It currently has a Zacks Rank #2.

The Zacks Consensus Estimate for UAA’s current fiscal-year sales and EPS implies declines of 10.6% and 50%, respectively, from the prior-year actuals. The company has a trailing four-quarter earnings surprise of 75.1%, on average.

Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North America apparel market. GIL carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for GIL’s 2024 sales and EPS indicates an increase of 1.5% and 15.6%, respectively, from the year-ago reported levels. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.

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