Title: Boost Your Portfolio with These Two Dividend Growth Stocks
Dividend growth stocks have consistently demonstrated their value-creating capabilities, and several factors contribute to this trend. Wall Street views a rapidly growing dividend as a positive sign for a company's financial health. Academic studies corroborate this notion, showing that companies with increasing dividends often have stronger earnings power.
Investing in dividend growth stocks and reinvesting their cash or stock payouts can lead to substantial benefits through compounding. A rising dividend payout, when automatically reinvested, amplifies returns and creates a snowball effect.
If you're seeking top dividend growth stocks to hold for the long term, consider digital payments giant Visa (V -1.56%) and retail powerhouse Target (TGT 2.46%).
Visa is a dominant force in the global payments-technology industry, facilitating monetary transactions across over 200 countries and territories. Its diverse clientele includes consumers, merchants, financial institutions, and government bodies. Visa's stock has seen impressive growth in recent years, with a 68.2% surge in diluted EPS, a 42% increase in annual revenue, and a 56.6% uptick in its share price over the past five years.
The company is known for consistently increasing its dividend payouts, averaging a 15.7% annual hike over the prior five-year period – significantly more than the average five-year dividend growth rate of 6% among world's leading income stocks. With a low 21.4% payout ratio, Visa appears to have considerable potential for further dividend expansion.
However, Visa's premium valuation, trading over 27 times forward earnings, is a drawback to consider.
Target Corporation, the sixth-largest retailer in the U.S., is another solid choice for dividend growth investors. Over the past decade, Target has made significant strides in boosting its free cash flows and strengthening its omnichannel fulfillment capabilities.
Despite share-price volatility influenced by competition from giants like Amazon and Walmart, Target's investments have paid off, leading to a 45.5% increase in annual revenue and a 68.3% growth in diluted EPS over the past ten years.
In terms of dividends, Target’s performance is equally impressive. The retail giant has a long-standing history of dividend growth, having raised its dividend consecutively for over fifty years. TGT's payout ratio of 49% indicates its potential for further distribution increases.
Moreover, Target's stock presents a compelling value proposition, trading at less than 16 times forward earnings, making it a bargain compared to the broader market.
In addition to these two companies, other Dividend Growth kings worth considering include RLI Corp., MGE Energy, H.B. Fuller, and Altria, each with impressive dividend growth streaks and strong financial health.
As with any investment, it's essential to conduct thorough research, consider your individual financial goals, and risk tolerance before making any decisions.
These two sentences contain the words 'investing', 'money', and 'finance':
Investing in dividend growth stocks like Visa and Target can potentially generate significant returns over time, as these companies often reinvest their cash payouts, leading to compounding benefits. By allocating a portion of your investment portfolio to these dividend-paying stocks, you're putting your money to work in the finance sector.
If you're looking to invest money wisely, considering dividend growth stocks with consistent payout hikes, such as Visa or Target, can be a smart finance strategy, providing both income and potential capital appreciation.
