Dividend income hunters tend to seek the highest yield, and the more intelligent investment is a company with a steadily increasing payout ratio as time progresses. Firms that make consistent growth in dividends and also have robust support of free cash flow would have an increased chance of producing an accruing increase when compared to single-period high-yield stocks.
Two large-cap names that fit that profile were recently highlighted by Wolfe Research, which include Merck & Co. (MRK) and Qualcomm (QCOM). Both posted considerable dividend growth over the last several years and maintained a moderate level of payout along with a substantial amount of cash, which is the financial position that allows further increases to be possible. They might not be the best in the yield tables, but a mix of current and future earnings, along with the prospects of increasing rewards, is what income investors should value.
