2 Stocks With Dividend Hikes, Upcoming Ex-Dividend Dates, Upside Potential

What could a bank and a luxury retailer possibly have in common?

Both recently raised dividends and go ex-dividend this week, but more importantly, these offer capital appreciation potential for investors and carry a “Buy” rating from analysts, thanks to their solid fundamentals.

1. TowneBank (TOWN)

Overview

TowneBank (TOWN) operates across Hampton Roads, Central Virginia, and parts of North Carolina.

Last month, TowneBank raised its quarterly cash dividend by 8% to $0.27. The record date is June 27, 2025, meaning shareholders should buy the stock by June 26th to be eligible for the payout on July 11.

TowneBank has grown dividends for 13 consecutive years, with a 5-year CAGR of 6.8%, signaling financial strength. The forward dividend yield is 3.3% at current stock prices. It expects cash flows of $760 million from its securities portfolio in the next two years.

Over the past four quarters, the company beat earnings estimates but had one revenue miss.

Why TOWN Stock Is a Strong Pick

Recent acquisitions, related synergies and benefits position TOWN well for future performance.

In April, TowneBank and Old Point Financial agreed to merge. The deal will expand TowneBank’s dominant foothold in the Hampton Roads MSA, a key driver of the regional economy.

Hampton Roads is a strategic hub for U.S. naval operations, nuclear-powered shipbuilding, and emerging cybersecurity innovation — areas critical to national defense and economic resilience. The region brings together major industry players, research institutions, and defense organizations, making it a key nexus of influence.

The significant branch overlap between TowneBank and Old Point Financial is expected to result in 45% cost savings in its non-interest expense base. The deal adds approximately $1.5 billion in assets and a low-cost deposit base with an average cost of 1.69% to TowneBank.

Revenue synergies should accelerate profitability and a low-cost funding base is expected to increase the merged entity’s value. A 10% accretion to EPS is expected in 2026 with fully phased-in cost savings.

The fact that TowneBank went ahead with the Old Point Financial acquisition just after completing its Village Bank buy shows the company’s confidence in its ability to efficiently integrate M&A for strategic growth. The expected asset base (including the Old Point acquisition) of $19.5 billion comprises $12.1 billion in organic assets and $7.4 billion from acquisitions – underscoring that M&A is a key pillar of its growth strategy.

TOWN stock has a consensus Buy rating from analysts. In view of the above-mentioned acquisition-related benefits, the stock has the potential to at least revisit its 52-week high of around $38, which represents nearly 12% upside from current price levels.

2. Ralph Lauren (RL)

Overview

A global luxury retailer, Ralph Lauren (RL) raised its quarterly cash dividend by 10% to $0.9125 per share, bringing the total annual dividend to $3.65 per share – yielding 1.35% on a forward basis at current stock price levels. The dividend is payable to shareholders on July 11 with a record date of June 27. Ralph Lauren has grown its dividend for three years in a row, at a 3-year CAGR of 6.3%.

Over the years, Ralph Lauren has reduced discounting and increased full-priced selling, shifting to a less price-sensitive customer base. This has helped boost its gross margins by 700 basis points for fiscal 2025 from pre-pandemic levels. RL’s margins also top the sector median: RL’s Trailing Twelve Months (TTM) gross margin is 68.6% vs. 38.2% for the sector, while TTM net income margin is 10.5% vs. 4.4%, and its levered free cash flow (FCF) margin is 11.5% vs. 4.7%.

International business now represents 57% of luxury retail chain’s topline, up from 45% pre-pandemic. Ralph Lauren also boasts significant supply chain diversification — no single country accounts for more than 20% of its production, including China, which represents a single-digit percentage.

DTC (Direct-to-Consumer) now forms two-thirds of the business. For fiscal 2025, Ralph Lauren added a record 5.9 million new consumers to its DTC businesses — a high single-digit year-on-year increase, led by younger, less price-sensitive female cohorts.

Why RL Stock Is a Strong Pick

Ralph Lauren is making gains where many retailers are struggling. An upscale customer base that provides pricing power, along with robust DTC and international sales – positions RL well for continued growth.

AUR (Average Unit Retail) or average selling price per unit – has grown every quarter for the past eight years, while the brand’s luxury and value perceptions have also grown progressively.

While tariffs are expected to be a headwind, Ralph Lauren plans to hike prices for its upscale, less price-sensitive customer base to manage the cost impact. The company is assessing additional pricing actions for calendar 2025 and Spring 2026, on top of the proactive pricing already planned for 2025 in North America and Asia.

Over the last four quarters, RL has beaten earnings and revenue estimates while growing revenue year-on-year. It has also surpassed full-year earnings and revenue expectations for the last four years.

In 2025, Ralph Lauren generated $1 billion in free cash flow and returned $625 million to shareholders through dividends and buybacks.

For fiscal 2026 (its current financial year), the company expects low single-digit revenue growth and a modest operating margin expansion given the high level of volatility.

For the first quarter of 2026, RL expects:

• Revenue to rise high-single digits year-over-year
• Operating margin to expand by 150–200 basis points
• AUR to grow by high-single digit

RL has a Buy rating from analysts and trades at a forward PEG ratio of 1.9 vs. its historical 5-year average of 3.6. A PEG reversion to even 2.2 would represent at least 15% upside from current levels.

Bottom Line

Recent acquisitions position TowneBank (TOWN) for long-term growth, while Ralph Lauren (RL) continues to benefit from pricing power, international momentum, and a growing DTC business. Both stocks go ex-dividend this week, which can lead to short-term volatility. Dividend-focused investors may consider buying before the ex-dividend date to capture the payout. For others, dips following ex-dividend dates often offer attractive entry points to accumulate quality names.

Please note that I am not a registered investment advisor and readers should do their own due diligence before investing in this or any other stock. I am not responsible for the investment decisions made by individuals after reading this article. Readers are asked not to rely on the opinions and analysis expressed in the article and encouraged to do their own research before investing.