Last-Minute Stocking Stuffers For Dividend-Growth Investors

There Are Tailwinds In The Market

If you are looking for two last-minute investments to stuff your portfolio with look no further than these two dividend-growth stocks. On the one hand, we have a financial stock in the early to middle stages of a major melt-up. On the other, a pandemic-winner set up to win again in 2021. In both cases, we have high-quality dividend-growth stocks that would fit in any income portfolio.

JPMorgan Chase & Co Resume Buybacks

The entire financial sector got a boost last week when the Fed announced banks could resume their buybacks. The buybacks and dividend increases were halted earlier in the year as a means of preserving capital due to the COVID pandemic. Since then, capital losses have been much less than expected while reserves are at record highs. The news doesn't lift all restrictions but does allow some the banks to give back some of their massive amounts of capital. What this means is that banks with positive earnings, like JP Morgan (NYSE:JPM), will be allowed to buy back stocks and pay dividends in the first quarter.

The results of JP Morgan’s stress test are excellent. The company maintained a Basel III Common Equity Tier 1 capital ratio of 11.3% and enough to allow buybacks and a dividend increase. The company’s board authorized buybacks in the amount of $30 billion or nearly 10% of the market cap. The board decided to keep the dividend steady at $0.90 per share but an increase is in the cards as well. With share prices near $120, the yield is an attractive 3.0% as it is.

Shares of JPM surged more than 5.0% on the news and on the verge of firing a strong-buy signal. A move above the $123.50 level would confirm a break-out from consolidation and continuation of the November/December rally. Using simple projections, this move could be worth about $20 or 16% over the course of the next 2-3 months. Longer-term, JPM could set new all-time highs in the first half of the year.

Walmart Is Riding A Wave Of Analysts Love

Walmart (NYSE:WMT) has been riding a wave of analysts’ love that still has some room to run. The latest comes from RBC Capital markets which calls it a top-pick for 2021. Analyst Scott Ciccarelli raised the rating from Sector Perform to Outperform citing the company’s position within the market, eCommerce, and value for consumers. In his view, and mine, Walmart is poised to do well in both the pandemic-hindered and reopening environment.

RBC put a price target of $170 on the stock which is well above the consensus but not even the Wall Street high. The consensus is closer to $150 while the high of $177 was set by DA Davidson. The consensus target and rating have been edging higher over the past month but there are still plenty of analysts on the fence to help drive it higher. A little more than 25% of the analysts are neutral or even bearish.

Regarding the dividend, Walmart pays about 1.50% with shares near $145 and the payout is growing. The company has been increasing the distribution for 47 years and there is no indication that the trend will end. The caveat is that increases are running about 2.0% annually which isn’t much, the trade-off is safety and capital growth. Walmart is expected to sustain low to mid-single-digit revenue growth in 2021.

Shares of WMT have been moving steadily higher all year and are now trading just below the recently set all-time high. The RBC upgrade has shares edging higher in early action and may be the catalyst to get the stock back to all-time high levels. Regardless, the stock is in an uptrend and should continue higher over the coming quarters. In the near-term, there is some risk in the short-term 30-day moving average. If the stock can get above there a new all-time high will likely come sooner rather than later. If not there may be a chance to buy into this 2021 dividend-growth story at the $140 level.