More and more companies are stepping up to declare dividends this year, with big names like Meta Platforms and Alphabet, Google’s parent company, leading the charge. Wolfe Research has pinpointed a host of other firms that might soon shower their shareholders with dividends as well. According to Wolfe, the best bets for new dividend payers are companies already involved in buybacks, have manageable debt levels, and boast substantial free cash flow. This year has already seen a notable increase in dividend announcements, equalling the total for 2023, according to Wolfe’s Monday update.
However, the market’s reaction to these announcements can be mixed. Chris Senyek, Wolfe’s chief investment strategist, cautioned that Wall Street doesn’t always react positively when companies start issuing dividends. Historically, companies launching their first dividend programs have often seen their stock underperform the market over the next few months. Despite this potential hurdle, Wolfe Research has identified several stocks that could soon start delivering quarterly dividends.
Among these potential candidates is Abercrombie & Fitch, the clothing retailer that’s already making waves in 2024 with its stock up by over 78%. Based in New Albany, Ohio, Abercrombie has been on the rise recently, thanks to an optimistic sales growth forecast for the year. Just in the past month, the stock has climbed 20%, fueled by investor enthusiasm.
Another potential contender highlighted by Wolfe is Mattel, the iconic toy company behind Barbie. Despite its stock remaining relatively flat in 2024, Mattel shines because of its impressive 7% free cash flow yield, positioning it well for possible dividend introductions. Alongside Abercrombie and Mattel, other names that Wolfe has spotlighted are Match Group and Airbnb, which might also join the dividend trail.
