Income stocks tend to come from defensive industries, usually
have steady earnings growth and are generally slowing-moving
issues.Baxter International (
) fits that bill.
But the company has a history of raising its dividend.
The Deerfield, Ill.-based company most recently hiked its
shareholder payout in late July. That's when it boosted its
quarterly dividend by 34% to 45 cents a share from 33.5
Baxter has lifted its payout each year since 2007. The
company's dividend has more than doubled since 2008.
On an annualized basis, Baxter pays $1.80 a share. This works
out to a yield of about 3%, which is one of the biggest among the
19 dividend-paying stocks in IBD's medical products industry
group. Baxter's also has a higher yield than the S&P 500's
Some others in the group, such as United Guardian (
) andFemale Health (
), pay higher yields, but either have weak Composite Ratings or
are low-priced issues. Baxter has a Composite Rating of 89.
At the time of its dividend hike, the maker of medical devices
and treatments for hemophilia and other conditions also announced
a stock buyback of up to $2 billion. It still has about $450
million left from a prior stock repurchase program.
"Baxter remains committed to a disciplined capital allocation
strategy, which includes returning value to shareholders through
both dividends and share repurchases," said Chief Executive
Robert J. Hombach in a press release.
The company's earnings don't grow fast, but the bottom line
has moved up consistently for years. Following some tough times
in 2003 and 2004, earnings have grown each year since 2005. Since
1999, sales have increased by single to low double digits.
The stock has a five-year Earnings Stability Factor of 4. The
measure goes from zero to 99, with zero indicating a most steady
stream of profit performance.
Analysts polled by Thomson Reuters see Baxter's earnings
rising 5% this year.
The company's bottom-line growth is expected to pick up to 8%