3 High-Growth Dividend Stocks for Long-Term Investors

high-growth dividend stocks - 3 High-Growth Dividend Stocks for Long-Term Investors

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Everyone loves a growth stock. It means the company is actually growing its revenues and earnings, therefore providing a clear trajectory for share price appreciation.

Everyone also loves a dividend stock. It means the company is paying investors a quarterly distribution, therefore ensuring investors get paid just for owning the stock.

If everyone loves a growth stock and everyone loves a dividend stock, then everyone must really love high-growth dividend stocks, right?

Right. But they’re hard to find. High-growth dividend stocks are like needles in the haystack. A lot of companies have big dividends, but no growth. Meanwhile, a lot of growth companies don’t invest in a dividend.

With that in mind, here’s a list of my 3 favorite high-growth dividend stocks that give investors both quarterly distributions and healthy earnings growth.

High-Growth Dividend Stocks 1: Apple Inc (AAPL)

aapl stock
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There is no company in the world quite like Apple Inc. (NASDAQ:AAPL).

Not only is Apple the world’s largest publicly traded company, but it is also arguably the world’s most recognizable brand. A brand which continues to create new products and cross-sell and up-sell consumers. These multiple cross-selling (Apple Watch, Apple Music, etc) and up-selling ($1,000 iPhone X) opportunities translate into consistent and healthy earnings growth.

Last quarter, earnings rose 16% to an all-time record high.

Meanwhile, the company is so big that it has more than enough cash to go towards a healthy dividend.

Currently, the dividend yield on AAPL stock is right around 1.5%. But with Apple committing to becoming net cash neutral over the next several years, that means billions of dollars will go towards hiking that dividend. Thus, the current 1.5% yield will likely only get bigger over time.

Overall, AAPL is a stock where you can get consistent and healthy earnings growth alongside a big and growing dividend. That is a great combination.

The stock has been weak lately as Wall Street freaks out over how many iPhone X’s the company sold. The harsh reality is much less than anyone anticipated. But the stock has already been hammered on these concerns, and the rest of the Apple business is doing very well.

Consequently, Apple stock should be bought on this weakness.

High-Growth Dividend Stocks 2: Intel Corporation (INTC)

Intel Stock Walks the Walk, and Its Fundamentals Prove It
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Chipmaker Intel Corporation (NASDAQ:INTC) used to be one of those healthy dividend stocks with muted growth prospects.

But recently, that has changed in a big way. The business model is undergoing its most revolutionary transformation in company history from a PC-centric business to a data-centric business. In simple terms, that means the company is flipping its focus from making chips for computers to making chips for data centers, autonomous technologies and the like.

This transition has resulted in renewed top- and bottom-line growth. Intel’s data-centric business now represents roughly half of the company’s overall business, and it’s growing at a 25% clip, led by robust growth in the data center market.

This is not only leading to big revenue growth (overall, revenues rose 13% year-over-year last quarter), but even bigger earnings growth (32%). As it turns out, the data-centric business has higher margins, and therefore, as that business scales, the company’s overall margin profile improves.

Meanwhile, amid all this renewed operational strength, Intel’s dividend hasn’t gone anywhere. The stock still has a dividend yield of 2.3%, which is really big for a company growing earnings at a 30%-plus clip.

Plus, the stock is pretty cheap. INTC stock trades at less than 14-times this year’s guided earnings. Considering management’s guides have proven to be conservative, the realistic fiscal 2018 earnings multiple is more like 12 or lower. That is dirt cheap.

Overall, INTC is a really cheap stock with strengthening growth prospects and a healthy dividend. That combination makes the stock a good one to own.

High-Growth Dividend Stocks 3: Nike, Inc. (NKE)

Despite the Markets Seeing Red, NKE Stock Could Rally 20%
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When it comes to the athletic retail market, it’s hard to argue against the undisputed king, Nike, Inc. (NYSE:NKE).

For the past two decades, Nike has emerged as the only consistently dominant player in athletic retail. New faces emerge and try to steal market share. They do, but they never get to Nike’s scale (see Lululemon Athletica inc. (NASDAQ:LULU)). Old faces pop up and try ride trends back into relevance. They do, but again, they never truly threaten Nike’s dominance (see Under Armour Inc (NYSE:UAA) and Adidas AG/S ADR (OTCMKTS:ADDYY)).

In other words, the athletic retail landscape has changed dramatically over the past 20 years. But the one thing that has remained constant is Nike’s dominance. Because of this, revenue and earnings growth have remained largely positive despite increasing scale.

History says this growth is sustainable in a long-term window. But in the near term, management is really pushing hard to turn its business around in North America, where things haven’t been so hot lately. The good news is that management said the North America business is nearing a critical inflection point, implying greener pastures ahead in terms of growth.

Even with all this growth, NKE stock still has a nice and healthy dividend. Currently, the stock features a dividend yield of 1.15%.

That isn’t great. But it’s pretty darn good for a company with as robust of a growth profile as Nike.

I do warn that NKE stock may be overextended here and now. The valuation is pretty rich, and Adidas is still gaining market share. Thus, the stock could pull back in the near term.

But longer term, NKE’s robust growth profile and strong dividend make it a solid investment in a multi-year window.

As of this writing, Luke Lango was long AAPL and INTC.


Article printed from InvestorPlace Media, https://investorplace.com/2018/04/3-high-growth-dividend-stocks/.

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