Boost Your Portfolio: 4 Promising Dividend Companies to Watch in 2023

When looking for good dividend payers, we tend to focus a little too much on their performance. The famous Dogs of the Dow We invest in the 10 Dow Jones companies with the highest dividend yields. This approach makes it possible to buy cheaply stocks that have been neglected by the market, but sometimes there's a very good reason why these stocks have been neglected... let's recall the example of General Motors not so long ago.

By focusing only on the performanceNot only do we run the risk of coming across lame ducks, but we also overlook companies that pay a dividend that may be modest, but is secure, progressive and sustainable. Some companies have a track record of increasing payouts that is nothing short of mind-boggling, and proves the robustness of their business model.

History is good, but the present and the future are even better. If I've been paying a growing dividend to my shareholders for 30 years, but my profits have stagnated or fallen over the past 3 years, there's bound to come a time when I'll have a bit of a problem. And this will be all the more true if I'm already offering particularly generous payouts. On the other hand, a company that has been paying a growing but modest dividend for a number of years, and which manages to generate juicy profits on a regular basis, will have a problem. to substantially increase its distributions in the future. The more prudent the company's shareholder payout policy, the more likely it is to maintain and grow its payments, even in difficult times.

That's why it's important to take into account the distribution ratio in addition to yield and consecutive years of dividend increases. For the company, a low ratio is equivalent to a ample room for maneuver (dividend increase, share buyback)A high payout ratio can lead to stagnating, declining or interrupted distributions, and therefore a lower share price.

A stock with a low payout ratio is therefore a potential dividend payer. Depending on its policy, strategy and economic situation, the company will determine how it rewards its shareholders. Below, we have selected four companies with very low distribution ratio :

• BCR : C.R. Bard, Inc. offers a yield of just 0.77%, but the payout ratio is only 12.94%. The dividend has been increased for 39 consecutive years. In fact, it has just been increased by 5.55% (the stock has been trading ex-dividend since July 21).
• ADM Archer-Daniels offers a yield of 1.72%, with a payout ratio of only 19.09%. The dividend has been increased for 36 consecutive years. The next increase is expected in February of next year.
• SIAL: Sigma-Aldrich offers a yield of 1,11%, the payout ratio is only 20,73%. The dividend has been increased for 29 consecutive years. The next increase is expected in February of next year.
• IBM : International Business Machines offers a yield of 1.79%, the payout ratio is only 22.67%. The dividend has been increased for 15 consecutive years. It has just been increased by 15%.

Nestlé (NESN.VX) also has a low payout ratio of 15.81%, but this is due to the extraordinary 2010 profit on the sale of the remaining Alcon stake. Normally, the payout ratio is around 70%.

Does this mean these four companies are good investments? That depends on the investor. Our algorithm does not currently consider them to be buying opportunities, as their valuations are currently too high in relation to expected revenues and the risks involved. Nonetheless, they are undeniably quality stocks that may appeal to an investor looking for a performance rather than price and will see the dividend as a welcome bonus.