Three Shares That Have Amplified Their Dividend Yields by Over 90% in a Half Decade
If you're seeking high-yielding dividend stocks, you might be attracted to the safest options. However, it's wise to shift your focus towards stocks with dividend growth. These are promising investments for several reasons. Firstly, these companies prioritize growing their dividends (meaning your recurring income will augment), and secondly, it often indicates their operations are flourishing and financially sound.
Some dividend growth stocks may disguise underperforming operations by incrementally enhancing their payouts annually, usually by a percentage point or less to maintain their dividend streaks. However, the stocks mentioned below have shown significant rate hikes.
Visa (V) 0.16%, UnitedHealth Group (UNH) 0.92%, and FedEx (FDX) -0.10% have amplified their dividend payments by more than 90% in just five years. Here's an elaborate look at why they can be outstanding buy-and-hold income stocks.
1. Visa
Visa's modest yield of 0.8% might go unnoticed due to the stock's impressive 70% surge in the past five years. The reason for a lower yield is simply Visa's impressive business growth and dividend expansion over the years.
The demand for credit cards isn't dwindling, especially with more transactions happening online. Given Visa's prominent role as a credit card provider, it's well-positioned to reap benefits from the industry's growth. The company delivered another stellar performance in its latest fiscal year (concluding Sept. 30), with net revenue swelling by 10% to $35.9 billion and net income escalating by a higher 14% to a total of $19.7 billion.
With robust margins and continued growth, it's no surprise that the company has been generous with its dividend hikes. In five years, Visa has nearly doubled its quarterly dividend from $0.30 to $0.59. For long-term investors, Visa is a compelling choice for both its impressive growth potential and rising dividend.
2. UnitedHealth Group
For those seeking a slightly higher yield, UnitedHealth Group's 1.4% payout may appeal more than Visa's. It surpasses the S&P 500's average yield of 1.2%.
UnitedHealth has been dealing with challenges due to rising medical expenses. Nevertheless, it continues to excel as a growth company via acquisitions, such as LHC Group last year and Change Healthcare the year before that. The company is eyeing further expansion, but the Justice Department is currently attempting to thwart its attempt to acquire home health company Amedisys. Investors, however, shouldn't rule out additional acquisitions in UnitedHealth's future.
UnitedHealth remains a growth titan, with profits skyrocketing from $15.4 billion in 2020 to $22.4 billion in 2023. The company also boosted its dividend payments by 94% over the past five years, from $1.08 to its current quarterly payment of $2.10.
Trading at a mere 20 times next year's projected earnings, UnitedHealth is an alluring long-term buy.
3. FedEx
Logistics giant FedEx provides the highest yield on this list – 1.9%. Investing in the company offers a chance to bet on the economy's long-term growth, particularly as e-commerce expands and the need for package delivery escalates in the future.
The company isn't performing exceptionally well currently, with sales stagnant in its latest period, which concluded on Aug. 31. However, the long-term forecast still looks optimistic for FedEx, with estimates from Grand View Research suggesting that the global courier, express, and parcel markets will expand at a compound annual growth rate of 10.6% until the end of the decade. FedEx's market dominance implies that there's still significant growth potential in store for the business, despite any setbacks in the short term.
Even if the economy struggles and FedEx's earnings don't pick up soon, its low payout ratio of around 32% leaves room for the company to boost its dividend in the coming years. FedEx hasn't shied away from raising its dividends, as in five years, they have escalated from $0.65 to $1.38 – a 112% rise during this period.
If you're prepared to be patient with the stock, FedEx can continue to be a top dividend investment for your portfolio.
In light of Visa's impressive 70% growth in the past five years, despite its modest dividend yield of 0.8%, smart investors might consider this finance giant as a promising long-term investment, given its continued dividend expansion.
UnitedHealth Group's acquisition strategy, such as purchasing LHC Group and Change Healthcare, indicates a commitment to investing in growth, making it an appealing choice for income seekers looking for a slightly higher yield of 1.4%, surpassing the S&P 500's average.
