These companies are growing their dividends and may see upside, Morgan Stanley says
September is typically a rough patch for stocks, but adding a few dividend payers to your portfolio may help smooth the ride.
Morgan Stanley named several companies that have raised their payments. The new month is just four days old, and the S & P 500 is up 0.4% already.
Stocks have been on a roller-coaster ride this week as traders grappled first with a spike in Treasury yields, rising oil prices and then worries over whether the Federal Reserve will hike interest rates at the central bank's next meeting in less than two weeks. Look to dividend stocks to offer a level of cushion in shaky times.
"Dividends can offer a reliable income stream, signal confidence to the market, and help stabilize [a] portfolio during periods of uncertainty and high valuations," wrote Morgan Stanley strategist Todd Castagno in an August report. To that end, his team screened the Russell 1000 for companies that have raised their dividends by at least 15% quarter over quarter in the past 12 months.
Here's a list of a few of those stocks: California-based East West Bancorp raised its dividend in January, lifting its quarterly payout by 20 cents to 80 cents a share. The stock is having a solid 2026, up 16%, and sports a current dividend yield of 2.4%.
In July, East West posted second-quarter earnings of $2.63 per share on revenue of $791 million, topping the FactSet analysts' consensus of $2.61 per share and $785.5 million. The bank also lifted its forecast for full-year net interest income growth, to a range of 7% to 9% year-over-year, up from earlier guidance of 6% to 8%.
In all, 13 of 17 analysts covering East West rate it a buy or strong buy, and the average price target suggests 13% upside from current levels, according to LSEG. Packaging Corporation of America was also highlighted by Morgan Stanley. The stock offers a current dividend yield of 2.5%, and is up 15% on the year.
Packaging Corp. hiked its quarterly dividend by 20% in May , lifting the annual payment to $6 a share. More than half of the analysts covering the stock rate it a buy or strong buy, with consensus price targets calling for 7% upside from current levels, according to LSEG.
Finally, Devon Energy appeared on Morgan Stanley's screen, with the investment bank on Friday calling the exploration and production play its favorite in the sector as oil prices approach $100 a barrel. "We prefer Integrateds & Majors with strong refining leverage and select oil E & Ps with positive rate of change," wrote Morgan Stanley analyst Devin McDermott.
Devon also recently emerged on Goldman Sachs' list of cheap dividend-paying energy plays . Devon offers a current dividend yield of 2.3%, and the stock is up 31% year to date. The company's board approved a dividend increase in May to 32 cents per share, up 33%.
Nearly all, or 27 of 30, analysts covering Devon rate it a buy, and consensus price targets imply nearly 23% upside, per LSEG. Other names on Morgan Stanley's list of consistent dividend growers include Nvidia , Royal Caribbean and Capital One Financial .