Dividend stocks allow investors to generate income without selling their assets. This setup presents several advantages. Dividend payouts can help with living expenses, and if you aren’t retired yet, you can reinvest each dividend back into the stock. 

The good hallmarks of a promising dividend stock include rising financials, an impressive dividend growth rate, and long-term catalysts. There’s more to analyzing a stock, but those three components help out a lot. 

While dividend stocks can generate steady income, they can also outperform the stock market. Some of the largest corporations offer quarterly dividends for their investors and also initiate plenty of stock buybacks. You can also find smaller dividend stocks that remain under the radar despite outperforming the stock market for several years.

If you’re looking for dividend stocks that can generate income and gains, you may want to monitor these promising opportunities. Each of them has outperformed the S&P 500 year-to-date.

Garmin (GRMN)

Garmin (NYSE:GRMN) has more than doubled over the past five years and is up by 33% year-to-date. It’s fitness segment is a major reason why the company has been able to outperform the stock market. Garmin produces many devices, including the watches that many athletes use to track data for every workout, such as their average pace per mile.

The company reported 14% YOY revenue growth in the second quarter of 2024 as the fitness segment grew by 28% YOY. Fitness makes up more than a quarter of the company’s total sales and was the second-fastest growing segment. Only Auto OEM sales grew at a faster pace — 41% YOY — than Fitness sales. 

Dividend growth is in the low single-digits, but the stock already yields 1.78%. That’s not bad for a growth stock that has outperformed the stock market for several years. Garmin also initiated a $10 million stock buyback in the quarter.

American Express (AXP)

American Express (NYSE:AXP) continues to attract new consumers, and most of its new cardholders are Millennials or Gen Z customers. Wall Street investors have noticed. The stock is up by 23% year-to-date and has soared by 87% over the past five years. The average price target implies an 8% gain from current levels. American Express is rated as a Moderate Buy.

The fintech firm continues to deliver solid results for investors. Q2 2024 revenue increased by 9% YOY while net income was up by 39% YOY. American Express’ net profit margins have been rising for several quarters and recently eclipsed 20%. This development should support a double-digit dividend growth rate for many years. The stock currently yields 1.21%.

American Express stock doesn’t only have a respectable yield and a growing business. The stock is also quite cheap at a 17 P/E ratio. Meanwhile, Visa (NYSE:V) and Mastercard (NYSE:MA) have P/E ratios above 30, and those two stocks also have lower yields than American Express. The opportunity looks promising for long-term investors.

Meta Platforms (META)

Meta Platforms (NASDAQ:META) continues to impress investors with solid financial reports. It’s an outlier compared to many big tech companies that didn’t do as well in the second quarter of 2024.

The social media giant’s revenue increased by 22% YOY in the quarter while net income surged by 73% YOY. Meta Platforms closed out the quarter with a 34.5% net profit margin. Shares are up by 41% year-to-date after the good earnings report and have surged by 158% over the past five years. The stock only trades at a 25 P/E ratio and offers a 0.41% yield for investors. Meta Platforms will likely maintain a double-digit dividend growth rate for many years due to its rising profits.

Daily active users across Meta Platforms’ family of apps increased by 7% YOY to reach 3.24 billion individuals. The company closed out the quarter with a $58.08 billion cash position, giving it plenty of funds to invest or distribute to investors.

On the date of publication, Marc Guberti did not have (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.comPublishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.