Investors seeking to blend the income potential of high-yielding stocks with the capital appreciation opportunity offered by growth stocks may find an enticing middle ground through dividend-growth stocks.
These stocks have the capacity to stimulate both growth and cash flow, offering an appealing prospect of future dividend income as retirement looms. As with all investments, some dividend growth stocks outshine others, so taking the time to research and compare several options is crucial.
Wingstop: A High-Flier in the Restaurant Space
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Wingstop (NASDAQ: WING) has taken flight, enriching long-term investors with a soaring 73% gain over the past year and an eye-popping 320% surge over the past five years.
With a $8 billion market cap, Wingstop boasts substantial revenue and earnings growth. Its robust performance, characterized by a 26.4% year-over-year revenue surge in the fiscal third quarter of 2023, including a staggering 66.9% year-over-year surge in digital sales, underscores its underlying strength.
Profitability is not amiss, as the company closed the third fiscal quarter with a robust 16.7% net profit margin, exemplifying a 46% year-over-year spike in net income. Envisioning itself as a top 10 global restaurant brand, Wingstop’s ambitious vision is substantiated by its enticing financial growth trajectory, with a network of over 2,000 restaurants underpinning its ascent.
Amidst its ascent, Wingstop remains committed to generously rewarding shareholders, as evidenced by a flourishing dividend. A 15.8% dividend hike in 2023 is a testament to its proactive stance, supplemented by the habit of issuing special dividends every two years, with the 2022 payout amounting to a noteworthy $4 per share.
Moody’s: A Beacon of Steady Dividend Growth
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Moody’s (NYSE: MCO) exemplifies the intersection of robust dividend growth and asset appreciation. With an enduring tradition of hiking its dividend by over 10% each year, Moody’s unwaveringly raised its quarterly dividend from 70 cents to 77 cents in 2023, foreshadowing an anticipated higher payout this month.
Threading an innovative path, Moody’s has embarked on harnessing the power of artificial intelligence to fortify its core software. This strategic shift is poised to entice new clients, enhance retention rates, and elevate the average revenue per customer, signalling a forward-looking stance.
Underlining its financial vigor, Moody’s prides itself on a sturdy profit margin and crystallized double-digit revenue and earnings growth in the third quarter of 2023. Capital returns to shareholders have been substantive, with share repurchases totaling $278 million over the initial nine months of 2023, and an impressive $424 million in dividend payouts during that period.
Backed by a forward price-to-earnings ratio of 35, Moody’s dominance is substantiated by a highest price target of $455 per share, pledging a tantalizing 15% upside.
Walmart: Sustaining a Time-honored Tradition of Value Generation
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Walmart (NYSE: WMT), a venerable presence with over 60 years of history, has been a reliable ally, conferring a commendable 77% gain upon its investors over the past five years and authorizing share repurchases amounting to $1.3 billion in the first nine months of fiscal 2024.
Amidst its versatile growth trajectory in domestic and international markets, Walmart’s overseas expansion is propelling higher growth rates, with Q3 FY2024 witnessing a total revenue surge of 5.2% year-over-year, inclusive of a robust 15% year-over-year e-commerce escalation. Evidencing its bullish outlook, Walmart has heaved its fiscal year sales growth guidance from 5% to 5.5% and augmented its annual earnings per share estimate from $6.40 to $6.48.
Touting a robust cash flow and a 1.35% dividend yield, Walmart boasts a storied tradition of fortifying its dividend. The retailer adroitly raised its quarterly payout from 56 cents to 57 cents per share, with another dividend increase on the horizon.
Projections hint at a 7% upside from the current price, with the highest price target of $210 per share envisioning a resounding 24.3% rally, underpinning Walmart’s enduring allure.
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.com Publishing Guidelines.
