The Western Union Company (WU), Intel Corporation (INTC): Two Great Dividend Stocks That Should Raise Payouts Soon

In 2012, Intel Corporation (NASDAQ:INTC) earned $2.13 per share and paid out about 41% of its earnings in dividends. EPS was down in 2012 by about 11%, and earnings declines could very well continue for the next few years. While there’s certainly room to expand the payout ratio, falling earnings may threaten near-term dividend increases.

Intel has strayed from its dividend schedule of the past few years by not raising the dividend in July, making for five quarters in a row without a dividend increase. There’s one dividend payment left this year, payable in December, and for Intel to continue its streak of annual dividend increases, this payment must be increased, too. I think we’ll see a small uptick, but long-term dividend growth should be more impressive.

While many seem to be leaving Intel for dead, there is substantial progress being made at the company. The Haswell line of processors were released earlier this year, offering massively improved battery life, and the next-gen Surface tablet from Microsoft is rumored to contain a Haswell chip. New Atom processors, Intel Corporation (NASDAQ:INTC)’s low-power chips, will begin showing up in devices this year, and the company recently stated that Intel-based Android tablets will cost as little as $100.

Intel also recently introduced the Quark SoC, or system on a chip. Quark is one-fifth the size of the Atom processors and will be aimed at markets that traditionally use embedded microprocessors. Applications could range from smart watches to industrial products, and the possibilities are nearly limitless.

It may take some time for these new initiatives to balance the decline in PCs, but Intel Corporation (NASDAQ:INTC) is in a good position going forward. The dividend is perfectly safe, and although short-term growth may be unimpressive, the long-term picture looks a lot better. And a near-4% yield is nice as well.

The bottom line
I expect we’ll be seeing dividend increases from both of these companies before the end of the year. The Western Union Company (NYSE:WU) should raise its dividend significantly, maybe as much as 20%, while Intel will likely opt for a small raise because of short-term issues. In the long term, both are excellent dividend growth picks, and I expect continued dividend growth for years to come.

The article 2 Great Dividend Stocks That Should Raise Payouts Soon originally appeared on Fool.com and is written by Timothy Green.

Timothy Green owns shares of Western Union. The Motley Fool recommends Intel and Western Union. The Motley Fool owns shares of Intel and Microsoft.

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