Dividend Dynamos: 3 Stock Picks for Steady Growth Until 2030


  • These are the dividend stocks to buy and hold until 2030 for a healthy upside in payout.
  • Albemarle (ALB): A healthy upside in lithium sales volumes will translate into robust free cash flow growth.
  • Amdocs Limited (DOX): This company has steady growth in recurring revenue and visibility for upside in free cash flows above $1 billion in the next 12 to 18 months.
  • Newmont Corporation (NEM): NEM boasts an investment-grade balance sheet and the potential for robust cash flows if gold surges higher.
dividend stocks - Dividend Dynamos: 3 Stock Picks for Steady Growth Until 2030

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Dividend stocks are favorites for investors who prefer low-beta stocks that provide regular cash inflow. Even among dividend stocks, there can be two major categories.

First, dividend aristocrats provide steady dividends. Further, there are dividend growth stocks that are likely to surprise investors with robust year-on-year growth in dividends. In general, dividend growth in these stocks is higher or significantly higher as compared to dividend aristocrats.

This column focuses on dividend growth stocks. Currently, the annualized dividend or the yield in these stocks might not be very attractive. However, over the next 5 to 10 years, these stocks will be among the best blue-chip dividend stocks.

Let’s discuss the reasons to believe that dividend growth in these stocks will be robust, backed by strong earnings growth. I must add that these dividend stocks are undervalued, and total returns are likely to be strong in the coming years.

Albemarle (ALB)

Albemarle (ALB) logo on a mobile phone screen
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Albemarle (NYSE:ALB) is my first pick among dividend growth stocks. Besides being bullish on dividend growth, ALB stock trades at an attractive forward price-earnings ratio of 7.2. Currently, the stock offers an annual dividend of $1.60, which translates into a yield of 0.84%.

It’s worth noting that Albemarle has aggressive growth plans. That, coupled with the point that lithium is likely to trend higher, will support the company’s cash flow upside outlook.

To put things into perspective, Albemarle expects lithium sales volume growth of 20% to 30% annually through 2027. The company expects an operating cash flow of $1.5 billion for 2023. Considering the expected sales growth volume, OCF growth will be robust. This will provide Albemarle will headroom for aggressive dividend upside.

Coming back to the core business, Albemarle has signed an agreement with Ford (NYSE:F) to supply over 100,000 mt lithium hydroxide from 2026 to 2030. These agreements will ensure that lithium sales target volume is achieved through 2030.

Amdocs Limited (DOX)

an abstract graphic of the earth in the cosmos

Amdocs Limited (NASDAQ:DOX) stock is another quality dividend growth stock worth holding for the long term. In the last 12 months, DOX stock has remained sideways and trades at a forward price-earnings ratio of 14.7. A breakout on the upside seems imminent for this 1.99% dividend yield stock.

From a business perspective, Amdocs is a provider of software and services to the media and telecommunication industry globally. The company has a big addressable market and currently sits on a 12-month backlog of $4.14 billion. With recurring revenue, the company’s cash flow visibility is high.

It’s also worth noting that Amdocs has guided for a free cash flow of $700 million for 2023. The company’s 12-month backlog has been increasing consistently. That points to steady revenue growth. I will not be surprised if Amdocs delivers an annualized FCF in excess of $1 billion in the next 12 to 18 months. That sets the stage for healthy dividend growth.

Newmont (NEM)

gold mining
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I believe that Newmont (NYSE:NEM) is likely to be a surprise package when it comes to healthy dividend growth in the coming years. At a forward P/E of 14, the stock looks attractive and provides a dividend yield of 4.10%.

Coming to the reasons to be bullish, I believe that gold is in a strong consolidation zone. With rising geopolitical tensions and swelling government debt globally, gold will surge higher. I would not be surprised if gold trades between $2,500 to $3,000 an ounce in the next few years.

If the above scenario holds true, Newmont is positioned for healthy revenue growth and massive free cash flows. It’s worth noting the company expects its all-in-sustaining cost to trend lower. Gold trending high with lower cost would imply a robust EBITDA margin and strong dividend growth visibility. With an investment-grade balance sheet, the company is positioned to make aggressive investments through 2030.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/08/dividend-dynamos-3-stock-picks-for-steady-growth-until-2030/.

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