Dividend stocks gained heightened popularity last year due to surging unemployment rates and recessionary trends. While the gradual economic recovery and falling unemployment rates of late have led some investors to assume more risks, high market volatility and the Fed’s dovish stance on interest rates have allowed dividend stocks to deliver positive returns so far this year. This is evidenced by SPDR S&P Dividend ETF’s (SDY) 4.9% returns year-to-date.

In late January, the  Fed announced its plan to hold interest rates steady at near zero levels for at least the next two years, or until the inflation rate exceeds 2%, whichever occurs first. In this regard, Fed Chairman Jerome Powell verbalized his intention to continue quantitative easing policies–buying back Treasury bonds and other asset purchases, causing the benchmark government Treasury yields to fall.

Against this backdrop, we think it would be wise to bet on T. Rowe Price Group, Inc. (TROW), Williams-Sonoma, Inc. (WSM), McGrath RentCorp (MGRC) and FS Bancorp, Inc. (FSBW). These names  have been able to grow their dividend payments over the past few years based on growing cash flows.

Rowe Price Group, Inc. (TROW)

TROW is a global investment management services company that serves individuals, institutional investors, retirement plans, financial intermediaries, and institutions. The company provides an array of company sponsored U.S. mutual funds, other sponsored pooled investment vehicles, sub-advisory services, separate account management, recordkeeping, and related services.

Last December,  TROW launched a new short-duration, fixed-income fund designed to deliver higher income while limiting volatility and actively managing downside risk. This fund should l attract clients that are looking to include riskier assets in  their portfolios,  seeking a higher yield than traditional short-term bond strategies.

TROW pays $4.32 in dividends annually, yielding 2.65% at its current share price. It has a payout ratio of 36.26%. The company’s dividend payments have grown at a CAGR of 11.7% over the past five years.

TROW’s net revenues have increased 18% year-over-year to $1.73 billion in the fourth quarter ended December 31, 2020. Its non-GAAP net operating income has increased 36.5% from the year ago value to $827 million, while its EPS has improved 42.4% to $2.89 over the same period. During the quarter, its assets under management increased $160.1 billion to $1.47 trillion.

Analysts expect TROW’s revenues to grow 21.8% year-over-year to $1.78 billion in the current quarter ending March 31, 2021. A  consensus EPS estimate of $2.88 for the current quarter represents a 54% improvement year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in each of the trailing four quarters. TROW has gained 19.2% over the past six months.

TROW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.

TROW has a B grade for Growth, Quality and Stability. Within the B-rated Asset Management Industry, it is ranked #3 of 64 stocks.

In total, we rate TROW on eight different levels. Beyond what we stated above, we also have given TROW grades for Value, Momentum and Sentiment. Get all TROW’s ratings here.

Williams-Sonoma, Inc. (WSM)

Based in California, WSM is an omni-channel specialty retailer of various home products. The company markets its products through e-commerce websites, direct-mail catalogs, and retail stores.

Earlier this month, WSM was included in the 2021 Bloomberg Gender-Equality Index (GEI). This demonstrates WSM’s continued effort in creating a diverse and inclusive workplace that reflects the communities it serves. The inclusion reflects a high level of disclosure and performance across various gender equality pillars.

On February 5, 2021, WSM launched a new collection of entertaining and tabletop items exclusively at Williams Sonoma and Pottery Barn in partnership with actress, author, and activist Marlo Thomas. The Marlo Thomas Collection at WSM is expected to attract a large volume of potential customers.

WSM pays $2.12 in dividends annually, yielding 1.7% on its current share price. It has a payout ratio of 25.4%. The company’s dividend payments have grown at a CAGR of 7.4% over the past five years.

WSM’s net revenues have increased 22.4% year-over-year to $1.77 billion in the fiscal third quarter ended November 1, 2020, driven by accelerated sales activity across all brands. Its non-GAAP net operating income has increased 151.9% from its  year ago value to $276.82 million, while its non-GAAP EPS has improved 151% to $2.56 over the same period.

Analysts expect WSM’s revenues to grow 17.5% year-over-year to $2.17 billion in the about-to-be reported quarter (ended January 31, 2021).  A consensus EPS estimate of $3.37 for the fourth quarter represents  a 58.2% improvement year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 31.9% over the past six months.

WSM has an overall rating of B, which equates to Buy in our POWR Ratings system. WSM has an A grade for Quality and Momentum, and B for Growth and Value. Of the 64 stocks in the A-rated Home Improvement & Goods Industry, it is ranked #6.

Click here to see the additional POWR Ratings for WSM (Stability and Sentiment).

McGrath RentCorp (MGRC)

MGRC is a diversified business-to-business rental company. It operates through four segments: Mobile Modular, TRS-RenTelco, Adler Tanks, and Enviroplex. The company rents and sells relocatable modular buildings, portable storage containers, electronic test equipment and related accessories, and liquid and solid containment tanks and boxes.

MGRC pays $1.68 in dividends annually, yielding 2.13% on its current share price. It has a payout ratio of 42.14%. The company’s dividend payments have grown at a CAGR of 10.4% over the past five years.

Despite uncertainty due to COVID-19, MGRC’s  revenues for the mobile modular segment increased 10.6% year-over-year to $95.41 million in the third quarter ended September 30, 2020, while revenues for the TRS-RenTelco segment increased 5% to $35.86 million over the same period. Its adjusted EBITDA for the nine-month period (ended September 30, 2020) increased 1.5% from its  year ago value to $175.68 million.

Analysts expect MGRC’s revenues to grow slightly year-over-year to $129.69 million in the current quarter ending March 31, 2021. A consensus EPS estimate of $0.82 for the current quarter also represents  a slight improvement year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 17.1% over the past six months.

MGRC has a B grade for Quality, Stability, and Sentiment in our POWR Ratings system. In the B-rated, 86-stock Industrial – Services Industry, it is ranked #35.

Click here to see the additional POWR Ratings for MGRC (Value, Growth, and Momentum).

FS Bancorp, Inc. (FSBW)

FSBW is a bank holding company for 1st Security Bank of Washington. It operates in two segments, Commercial and Consumer Banking,  and Home Lending. The Bank provides loan and deposit services to local families, local and regional businesses, and industry niches.

A week ago, FSBW completed the issuance of a $50 million of fixed-to-floating rate subordinated notes in a private placement transaction. The proceeds of the capital raise will allow FSBW to remain nimble and will   support the Bank’s organic growth, potential share repurchase activities, and potential acquisition opportunities.

FSBW pays $1.04 in dividends annually, yielding 1.76% at  its current share price. It has a payout ratio of 16.69%. The company’s dividend payments have grown at a CAGR of 25.5% over the past five years.

FSBW’s net interest income has increased 14.5% year-over-year to $19.87 million in the fourth quarter ended December 31, 2020. Its EPS has risen 100% from the year ago value to $2.60, while its efficiency ratio improved 658 basis points sequentially to 53.75 for the three-month period. The company’s total assets increased 2.9% sequentially to $2.11 billion.

Analysts expect FSBW’s revenues to grow 9.7% year-over-year to $28.92 million in the current quarter ending March 31, 2021. A consensus EPS estimate of $1.78 for the current quarter represents  a 56.1% improvement year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in three of the trailing four quarters. FSBW has gained 38.3% over the past six months.

FSBW’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our rating system. FSBW has a B grade for Stability, Value and Growth and an A for Sentiment. It is currently ranked #2 of 4 stocks in the Pacific Regional Banks Industry.

We also have given FSBW grades for Momentum and Quality. Get all FSBW’s ratings here.

The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.

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TROW shares were unchanged in after-hours trading Wednesday. Year-to-date, TROW has gained 7.83%, versus a 4.95% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...

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