If you love investing, you must first understand diversification and the role it plays in wealth creation. Growth stocks must be part of your portfolios and one that pays dividends is actually a double bonus. With many stock alternatives, finding the finest growth stocks with dividends may be tough.Again, you have to check the percentage of the dividends and finally, the history of the company’s performance over a period of time. So if you are into growth stocks, this is for you.
Best Growth Stocks with Dividends
According to the company’s website, “dividend growth equities have provided an attractive combination of profits and cash flow growth prospects, sound balance sheets, and sustainable dividend policies.” In the past, these stocks have done very well in bull markets and acted as a safety net in bear markets and other unstable times. These are the nine best dividend growth stocks to buy right now if you’re an investor looking to add to your portfolio with stocks that could give you both a steady income and a chance for your money to grow over time. Each company on this list is expected to raise its annual cash dividend by at least 18% over the next two years. This is because each company has strong and growing fundamentals to back it up.
Best Growth Stocks with Dividends 2023
High-yield dividend companies are more exciting than lower yielders, but dividend growth stocks can be preferable for investors who plan to hold their investments for the long term. This is because a lot of high returns are not long-term. The remaining group, which is well-funded, can frequently only afford modest payout increases, just enough to maintain their record of yearly dividend increases.
Given this, let’s focus on four fast-growing dividend stocks that may offer longer-term passive income than their high-yield counterparts.
#1. Zoetis
First on our list of growth stocks with dividends is Zoetis. In a recent survey by The Human Animal Connection Research Institute and Zoetis, 86% of pet owners and vets said they would pay whatever it took for intensive medical care. Even though it is heartbreaking to think about anything bad happening to our cherished pets, Zoetis, with its selection of vaccines and medications for pets and livestock should only continue to gain significance.
In fact, Zoetis reported a total return of roughly 500% since going public through a split from Pfizer in 2013. Despite a 19% decline in the prior year, the company has nearly tripled the returns of the S&P 500 Index during the past five years.
Zoetis produces 61% of its sales from companion animals (cats and dogs) and 39% from cattle in the $45 billion animal health market. The corporation, which is geographically based in North America, Latin America, and Asia, maintains a portfolio of more than 300 products and boasts a leadership position in the pet, cattle, and swine industries.
Zoetis has increased revenues and earnings by 9% and 13%, respectively. This performance was recorded within the last three years. During this time, the company raised its dividend by 25% every year. As a result, it now yields 0.9% and has a low payout ratio of 26%. Zoetis trades at a generous 37 times earnings. Zoetis is a great dividend growth investment because it is growing steadily and there are megatrends in its favor.
#2. Tractor Supply Company
Tractor Supply’s Neighbor’s Club rewards program has 27 million members and is growing in dividends. They are following in the footsteps of Home Depot and Lowe’s with their 2,100 stores. They increased their quarterly dividend payments from $0.035 to $0.92 per share as of this writing. This is an increase of more than 2,200% since 2010. The company has outperformed the market over the past five years, helped in part by these dividends. But how does Tractor Supply manage to compete when Home Depot and Lowe’s are right around the corner?
Simply put, it’s by virtue of being the smaller, more rural counterpart to its enormous peers. Remember that about half of the company’s sales come from its livestock and pet division. Millions of farmers, ranchers, and even suburban gardeners go to Tractor Supply stores. This is because it has a niche offering of products that are similar but not exactly the same.
The 1.8% dividend only consumes 35% of the company’s total net income, and the shares sell at just 23 times earnings. Tractor Supply is a great dividend growth pick to hold forever after increasing its most recent payout by 77%.
#3. Old Dominion Freight Line
Old Dominion Freight Line, which specializes in carrying less-than-truckload (LTL) loads, has led the industry for the past ten years with a total return of over 1,200%. LTL carrying involves gathering partial loads from several sites and transporting them to one or more drop-offs, almost exactly as it sounds. Even though it is much more complicated than normal truckload trucking, Old Dominion is protected by how hard it is to do. Successful new entrants to the business are uncommon because there are only about 11,000 tractors, 43,000 trailers, 24,000 workers, 255 service centers, linehaul fleet managers, and the software needed to manage everything.
The best-in-class operations of Old Dominion are equally crucial for investors. In comparison to its LTL competitors, take a look at its profit margin and return on invested capital (ROIC), a metric of a company’s profitability from its debt and equity.
#4. ASML
Next on our list of growth stocks that pay dividends is ASML. Despite the undeniable complexity of ASML’s lithography process, which uses light to create patterns on the silicon wafers needed to produce semiconductor chips, its investment philosophy is much less complicated. Do you think there will be a rise in the need for microchips in the coming decades?
If your response was yes, ASML may be a classic buy-and-hold investment due to its overwhelming leading position in its industry. ASML is of utmost significance to the semiconductor industry, holding a monopoly with its cutting-edge extreme ultraviolet (EUV) lithography equipment and an approximately 80% share of the more developed deep ultraviolet (DUV) market.
The business has maintained an average free cash flow (FCF) margin of 26% over the past ten years as a result of its dominant positioning. ASML lavishly compensates its shareholders with this tremendous cash flow, as shown by the 1,600% increase in yearly dividends since its first payment in 2008. The company’s lithography equipment should continue to experience strong demand as nations consider becoming more technologically autonomous. ASML offers extraordinary dividend growth potential at an affordable price, trading at 27 times FCF.
#5. Diamondback Energy
If you own Diamondback Energy (FANG, $144.296), you are definitely disappointed with the company’s performance last year. Its total return is only 23.3%, far less than the U.S. oil and gas industry’s 31.7% return. The energy stock has underperformed over the last three years as well, rising 28.2% versus the industry’s 30.7% total return.
The business announced in October 2022 that it would pay $1.6 billion in cash and shares to acquire FireBird Energy LLC, which runs directly adjacent to Diamondback properties in the Permian Basin. FireBird has 75,000 acres of land, and by 2023, it should be able to make 25,000 barrels of oil equivalent per day (boe/d). Towards the end of November, the deal was finalized.
The company’s excellent free cash flow, which is the money left over after it pays for the capital investments it needs to make to grow its business, has allowed it to improve its capital return program for shareholders in a big way. Adjusted free cash flow for FANG in Q3 was $1.17 billion, up 57% from the same period last year.
It consequently distributed a base cash dividend of $0.75 and a variable cash dividend of $1.51 per share on November 25. Diamondback intends to distribute dividends and share repurchases totaling 75% of its free cash flow to shareholders until further notice. At the current price, the $9.04 yearly combined dividend yields 6.2%. Also, it will keep up its $4 billion stock buyback program, which involves repurchasing shares. Under its most recent program, it has repurchased $1.22 billion to date. Diamondback is among the best dividend growth stocks to invest in if you’re looking to profit from the ongoing oil and gas boom if you’re income-focused.
#6. Ingersoll Rand
The last on our list of growth stocks with dividends is Ingersoll Rand. Ingersoll Rand (IR, $57.38) has several hats to wear. The industrial stock’s two operating segments, Industrial Technology and Services (ITS) and Precision and Scientific Technologies, together with more than 40 market-leading brands, offer goods and services to numerous industries (PST).
The strategist community likes Ingersoll because it does a good job of purchasing smaller businesses and integrating them into the larger organization, resulting in recurring earnings over time. Six bolt-on purchases were announced during the third quarter. Ingersoll revealed that it had paid $525 million to acquire SPX Flow’s Air Treatment business after the third quarter ended. In 2022, the revenue from the air treatment unit is anticipated to be $180 million. Deltech, Pneumatic Products, and Hankison are some of the company’s brands. The purchase was finalized on January 3.
In July of last year, Ingersoll tried to buy all of SFX Flow for $3.7 billion, but Lone Star Funds outbid them. According to its capital allocation scheme, the company declared in September 2021 that it would begin paying out dividends on a quarterly basis. It started paying 2 cents per share on a quarterly basis, starting with the payment made in December 2021. Also, Wall Street thinks that IR will be one of the best dividend growth stocks. Over the next two years, the payout is expected to go up by 118.9%.
Do Any Growth Stocks Pay Dividends?
One of the best dividend growth investments available right now is the REIT. Its quarterly dividend, which was increased by 25 cents per share (20%) with the March 2022 payment, is currently $1.50 per share. Its $6 yearly payment returns a respectable 3.6%.
What is the Best Paying Dividend Stock?
The top dividend stocks consistently increase their yearly dividend per share amounts and maintain dependable, sustainable dividend rates. Your objectives, strategy, and time horizon will determine which dividend stock is ideal for you.
How Can I Make 100000 a Year From Dividends?
To earn $100,000 per year via dividend investment, you must increase your portfolio to at least $1 million. You’ll have more money thanks to prudent options trading, which you may use to buy more dividend stocks and move closer to your 6-figure target.
Do You Pay Taxes on Dividends?
With the exception of dividends that are repatriated into Nigeria via government-approved means, dividends received from non-resident corporations are taxable.
Is Apple a Dividend-Paying Stock?
Four times a year, dividends are paid on Apple stock. Each year in February, May, August, and November, it has paid its quarterly dividend.
Does Coca-Cola Pay a Dividend?
Dividends are usually given out by Coca-Cola on April 1, July 1, October 1, and December 15.
Is Walmart a Dividend Stock?
Since initially announcing a $0.05 per share annual dividend in March 1974, Walmart has boosted its annual cash dividend each year.
Does Google Pay a Dividend?
Google doesn’t anticipate paying a dividend anytime soon. According to Alphabet’s 10-K from 2022, the company has not yet paid a dividend since going public, and its main use of money is to make investments for the company’s long-term growth.
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