Want to get paid for owning a stock without having to sell it? Many dividend stocks offer this possibility. Corporations know that offering a dividend will attract more investors, and it’s a common practice for mature companies.
However, you’ll also see growth firms also distribute dividends. It’s possible to get a good combination of capital gains and dividend payments. Some dividend stocks offer this setup, including the dividend dynamos on this list.
Garmin (GRMN)
Garmin (NYSE:GRMN) is a tech company that produces GPS tracking devices. The company’s watches are popular among athletes since the devices track important metrics like mile pace, total mileage, heart rate, and others.
The company’s fitness and outdoor segments made up most of Garmin’s 2023 revenue. Aviation, marine, and auto OEM segments also contributed to total revenue.
Revenue growth accelerated in the fourth quarter of 2023 to reach $1.48 billion. It was a 13% year-over-year improvement. GAAP pro forma EPS increased by 27% year-over-year. Fitness and auto OEM experienced the highest growth rates, coming in at 22% and 54% year-over-year respectively.
The stock is up by 48% over the past year and has gained 70% over the past five years. Garmin has a dividend yield above 2% and a 21 P/E ratio. The stock is still down by roughly 20% from its all-time high. The recent expansion in profit margins can make the stock more enticing for long-term investors.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) offers a meager 0.75% dividend yield, but that’s not why people are rushing to buy this $3 trillion corporation. The firm has exposure to multiple growth verticals like cloud computing, artificial intelligence, and gaming. Microsoft’s diversified business model has helped the stock gain 60% over the past year and 250% over the past five years. This makes it one of those dividend stocks to consider.
Microsoft’s recent earnings report highlights sustainable growth that can continue for a while. The corporation reported an 18% year-over-year increase in revenue and grew its net income by 33% year-over-year. Big investments into artificial intelligence have been paying off as the company releases new AI tools and applies the technology at scale across its business segments.
Microsoft Cloud was the big growth driver for the quarter with revenue up by 24% year-over-year. Microsoft Cloud contributed $33.7 billion of the company’s $62.0 billion in Q2 FY24 revenue.
The stock may have a low yield, but investors will be happy to discover that Microsoft is growing the dividend at a high rate. Last year, the company raised its dividend by 10.3% year-over-year.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) is a semiconductor and software security conglomerate that has been rewarding shareholders for many years. The stock is up by 112% over the past year and has gained 351% over the past five years.
The company’s solid business model, advancements in artificial intelligence, and the recent acquisition of VMware have fueled the company’s ascent. The company reported 34% year-over-year revenue growth thanks to VMware. The acquisition is accelerating revenue growth across Broadcom’s software solutions segment.
Broadcom has also exhibited strong demand from AI data centers that need the firm’s chips. Net income dropped a bit but still came in at $1.3 billion. Broadcom also repurchased $8.29 billion worth of shares to increase shareholder value. The firm projects a 40% year-over-year revenue increase for the full year of fiscal 2024.
Broadcom is arguably the best dividend growth stock, especially after its recent post-earnings dip. The stock has a 1.60% dividend yield and hiked its quarterly dividend from $4.60 per share to $5.25 per share. That’s a 14.1% year-over-year increase which is normal for the company. The company raised its dividend by 12.2% year-over-year in the previous year.
American Express (AXP)
American Express (NYSE:AXP) is another contender for the top dividend growth stock. Shares are up by 42% over the past year and have gained 97% over the past five years. Despite the big gains, American Express stock only trades at a 20 P/E ratio.
The stock has a 1.25% dividend yield that continues to grow. American Express is well-known for its dividend likes, and the company continued this trend with a 16.7% dividend hike. Those dividend hikes can add up substantially for investors who buy and hold AXP stock for more than a decade. It’s long time horizons like these that truly capture the benefits of long-term investing.
American Express relies on strong consumer spending to generate high earnings. Even if consumer spending isn’t strong, most people will continue to use their credit and debit cards for convenience, rewards, and other factors. All in all, it’s one of those dividend stocks to buy.
The financial firm once again demonstrated healthy consumer spending with its Q4 2023 earnings report. During that quarter, revenue increased by 11% year-over-year while net income jumped by 23% year-over-year. The company achieved those results while buying back shares and reducing its average diluted common shares outstanding by 3% year-over-year.
Automatic Data Processing (ADP)
Automatic Data Processing (NASDAQ:ADP) is a global provider of cloud-based human capital management solutions that has been around for more than 75 years. The company’s solutions bring multiple departments together and helps businesses streamline their efforts.
The company still has some growth left in the engine and offers more stability than high-flying growth stocks. Shares trade at a 28 P/E ratio and offer a 2.30% dividend yield for new investors. The stock is up by 14% over the past year and has gained 56% over the past five years.
ADP is also the company that assembles data for U.S. employment figures such as private payrolls and the number of jobs added each month. Shares are only up by 4% over the past year, and that can be good for investors who want to get a high yield. The current yield is already good, but the company raises its dividend each year at a good clip.
For instance, ADP hiked its quarterly dividend from $1.25 per share to $1.40 per share in 2023. That’s a 12% year-over-year increase which has become normal for the firm. Solid upside plus a good yield and double-digit dividend growth rates make this one of those dividend stocks worth a closer look.
Mastercard (MA)
Mastercard (NYSE:MA) is the other credit and debit card firm on this list. Mastercard offers higher profit margins than American Express but also comes with a higher valuation. The stock also has a lower 0.55% dividend yield but hiked its dividend by 15.8% to start 2024. Shares are up by 36% over the past year and have gained 103% over the past five years.
Mastercard regularly delivers impressive profit margins along with revenue and earnings growth. The company delivered on those expectations in the fourth quarter of 2023. Net income increased by 10.5% year-over-year while the company’s top-line increased by 13% year-over-year.
Mastercard has been around since 1966 and has spanned multiple generations. It’s one of the top debit and credit card companies alongside American Express and Visa (NYSE:V). The financial firm looks poised to be around for many more decades if not centuries and can still reward long-term investors at current price levels.
Digital Realty Trust (DLR)
Digital Realty Trust (NYSE:DLR) is a real estate investment trust that specializes in data centers. Cloud computing and online data both ramped up demand for these types of properties. However, artificial intelligence has accelerated demand and helped DLR gain market share.
The firm’s stock is up by 41% over the past year and offers a 3.25% dividend yield. Digital Realty Trust experienced 11% year-over-year revenue growth in the fourth quarter of 2023 to reach $1.34 billion. The firm’s suggests core funds from operations per share of $6.60-$6.75 gives them plenty of room to cover the annual dividend of $4.88 per share.
Artificial intelligence tailwinds can bring this stock higher, but it isn’t reliant on AI. Big tech corporations need data centers and have vast budgets to cover rent payments. The firm has over 5,000 customers spread across more than 300 data centers. The company’s portfolio diversification can help it withstand market corrections and reward long-term investors. It’s one of those dividend stocks for investors.
On this date of publication, Marc Guberti held long positions in MSFT and AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.