This Strong Brand Keeps Serving Up Income Growth

With the stock market at all-time highs, investors can either jump in at high prices, look for value trades, or focus on great companies trading at reasonable prices. That last category has been strong for strategies such as dividend growth.

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  • More companies continue to raise their dividends, signaling a return to normal, or at least that a company can thrive during a pandemic.

    One of the latest companies to announce a dividend increase is Papa John’s International (PZZA).

    The pizza giant has had strong sales, with earnings up over 56 percent in the past year and revenue up 12 percent per year. Pizza chains were early beneficiaries of the pandemic, as they were already capable of delivering food ahead of a number of other competitors in the food space.

    Action to take: Pizza demand isn’t going away, and with a rise in Delta variant cases, pizza companies stand to benefit from those electing to avoid going out. For investors, there’s been a big jump in the dividend from $0.90 annually to $1.40. At current prices that’s a little bit of a low yield at 1.2 percent, but it has room for further growth over time.

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  • For traders, shares have been a strong performer and will likely continue to be for the foreseeable future. The January $135 calls are a bit out-of-the-money but already have some volume behind them. Last going with a bid/ask spread of around $3.10, the option can likely deliver high double-digit profits in the months ahead.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.