HomeMarket NewsThe Growth Chronicles: 3 Stocks with Substantial Dividend Increases in 2024

The Growth Chronicles: 3 Stocks with Substantial Dividend Increases in 2024

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Investors who solely pursue high dividend yields usually encounter disappointment. Typically, stocks with exceedingly high yields have underlying issues that have led to significant discounts, causing their yields to skyrocket.

While dividend investing has proven to be a successful long-term strategy, savvy investors recognize that growth, consistency, and sustainability are paramount. Companies that initiate a dividend and consistently increase it over time have outperformed other types of stocks in the market.

Historical data from Ned Davis Research and Hartford Funds show that stocks which began paying dividends and incrementally increased them over the years yielded an average annual return of over 10% between 1973 and 2022, surpassing all other stock groups. In contrast, stocks that did not pay dividends returned less than 4%.

Below are three stocks that recently raised their dividend payments by double-digit percentages, pointing to positive growth and resilience in the market.

Occidental Petroleum (OXY): Fueling Growth

Person holding cellphone with logo of American company Occidental Petroleum Corp. (OXY) on screen in front of website. Focus on phone display. Unmodified photo.

Source: T. Schneider / Shutterstock.com

Occidental Petroleum (NYSE:OXY) made headlines by slashing its dividend to a mere penny per share during the pandemic’s peak. However, the company quickly rebounded and has recorded substantial dividend hikes since then. Over the past three years, the dividend has grown at an impressive compound annual growth rate (CAGR) of 180%. Notably, Occidental recently announced another increase of 22% in April, elevating the dividend to 22 cents per share.

Although the current dividend level remains below its pre-cut value of 79 cents per share, Occidental is swiftly catching up. The company’s significant presence in the Permian basin has attracted the attention of none other than Warren Buffett. Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) has amassed over 248 million shares of OXY stock, with holdings valued at $15.2 billion.

Given the continued demand for fossil fuels in the foreseeable future, Occidental Petroleum and other oil stocks have a promising growth trajectory. Investors can expect Occidental to sustain its dividend hikes in the coming years.

Applied Materials (AMAT): Resilience Amid Challenges

Applied Materials (AMAT) company sign outside office

Source: michelmond / Shutterstock.com

Applied Materials (NASDAQ:AMAT) recently declared a 25% dividend increase to be paid out in June. Despite its shares reaching an all-time high of $214 per share, the company faced a setback last November when news surfaced that the U.S. Justice Department was criminally investigating its alleged attempts to evade export restrictions to China. While the probe has escalated to involve other regulatory bodies like the SEC, Applied Materials’ stock has managed to rebound from the episode.

Though investors should closely monitor these investigations, Applied Materials, as a diversified equipment manufacturer, serves as a reliable indicator for the broader semiconductor industry’s performance. The latest earnings report hints at a potential turnaround in PC and smartphone sales along with sustained growth in artificial intelligence (AI).

With an earnings-based payout ratio of 14% and an FCF payout ratio below 13%, Applied Materials has a secure dividend policy and ample room for further increments.

Domino’s (DPZ): Satisfying Investors’ Palates

Domino’s Pizza, Inc. (DPZ) Has Become the Top Name in Pizza

Source: Shutterstock

Domino’s (NYSE:DPZ) might be an unexpected addition to the list of dividend darlings, but the pizza giant boasts a remarkable 12-year track record of consistent dividend increases, growing at a nearly 20% CAGR. The company recently raised its dividend from $1.21 per share to $1.51 per share, representing a robust 24.8% hike.

Similar to Applied Materials, Domino’s dividend remains well-supported, with an FCF payout ratio of only 35%, leaving substantial room for future growth. As a top performer in the fast-food industry, Domino’s continues to expand its market share and profits, positioning itself as a reliable investment option.

Despite trading below its pandemic-induced peak, Domino’s stock remains attractively valued at 25 times next year’s earnings. With a growing customer base and strong financials, Domino’s premium pricing is justified.

On the date of publication, Rich Duprey did not hold any positions in the securities mentioned. The opinions expressed are solely those of the author.

Rich Duprey has been sharing insights on stocks and investing for over two decades. His work has been featured on various platforms including Nasdaq.com, The Motley Fool, and Yahoo! Finance, among others.

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