These companies may be primed to start offering a dividend, Wolfe says
A few notable names have started making dividend payments this year — and a handful of stocks just might have what it takes to begin spinning off income to investors, Wolfe Research found. Just this year alone, big names that have heralded their first dividend payments include Salesforce and Meta Platforms. Alphabet joined the ranks of dividend payers in April when it authorized its first-ever dividend of 20 cents per share, along with a $70 billion share buyback. Alphabet’s move to start a dividend is something to celebrate, but the real thrill is around the prospect of growing that payment to investors, Charlie Gaffney, managing director at Morgan Stanley Investment Management, told CNBC in April. He also manages the Eaton Vance Enhanced Equity Income Fund, which holds shares of the Google parent. “We are excited that they initiated, but we’re also excited about the opportunity to grow the dividend over time,” he said. That said, a few more names might be poised to kick off their first dividend payments, according to a May 20 report from Wolfe. “After a period of minimal dividend initiations over the prior ~10 years (growth focused market, COVID), there’s been an increase in announcements over the last 6-12 months,” said Chris Senyek chief investment strategist at Wolfe. The firm screened for potential dividend initiators, looking for names that have strong free cash flow yields, that are currently returning capital to investors through share buybacks and that are not highly levered. A few of the names are listed below. Footwear manufacturer Skechers made Wolfe’s list. Shares are up 13% in 2025, and the company has an estimated 2024 free cash flow to firm yield of 3%, according to Wolfe’s analysis. Analysts also generally like the stock, with 11 out of the 14 analysts covering the name rating it a buy or strong buy, according to LSEG. “We see strong pricing, an improving sales mix, and fixed cost leverage as margin tailwinds,” UBS said of buy-rated Skechers on April 15. “We expect SKX’s sales, [earnings before interest and taxes] margin, and earnings to grow much faster than the market expects.” Wolfe also called out O’Reilly Automotive as a potential dividend initiator, highlighting the company’s estimated free cash flow to firm of 3% in 2024. Shares are up a mere 1.5% in 2024, but the name remains liked by the Street, rated a buy or strong buy by 64% of the analysts covering it, per LSEG. O’Reilly was named a top pick at TD Cowen last month. Analyst Max Rakhlenko noted that “the stock appears priced for perfection, but fundamentals and execution remains strong, and we’d use a potential pull back as an opportunity to add.” PayPal also joined Wolfe’s list of contenders that may be poised to kick off a dividend. Estimated free cash flow to firm yield comes in at 7% for 2024, per Wolfe’s analysis. The stock has a modest 1% gain year to date, and 20 of the 47 analysts covering the name rate it a buy or strong buy, per LSEG. However, consensus price targets imply 22% upside from current levels. Wolfe is not the only Wall Street shop highlighting PayPal as a possible dividend initiator. Morgan Stanley earlier this month called out the stock as a company that could potentially issue a dividend, adding it to a list of ideas that have a “net cash position and sufficient free cash flow to sustain and self-finance initiating [a dividend].” Other names on the list include Mattel , Fiserv and Centene .
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