If you invest in stocks that have a long track record of increasing their payouts, chances are you’ll buy shares of these stocks for their stability and potential for dividend income. But just because a stock is an excellent dividend investment doesn’t mean it can’t also be a top growth stock to own. Stocks that can balance both dividends and growth can give investors the best of both worlds.
AbVie (NYSE: ABBV) And Walmart (NYSE:WMT) are two Dividend Kings who would also have doubled your money in the last five years. This is why these stocks are doing so well and why they can be excellent options to hold on to for the long term.
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Pharmaceutical company AbbVie is derived from this Abbott Laboratories in 2013. And if you count the time when it was part of the broader healthcare company, its dividend growth dates back more than 50 years, which is why it’s considered a Dividend King despite its seemingly short history.
Spinning off has allowed AbbVie to focus specifically on drug development, and those opportunities can be very lucrative, as evidenced by the stock’s impressive gains. Over the past five years, growth-oriented AbbVie has delivered nearly 150% returns to its shareholders. The more conservative Abbott Laboratories saw its value rise by just over 40% over the same period.
Today, AbbVie still pays a fairly high dividend (it yields 3.3%) and is also generating solid growth along the way. In its most recent quarterly earnings report, for the period ended September 30, the company reported net sales of $14.5 billion, a gain of 5% when excluding foreign currencies.
AbbVie remains focused on growth, especially as Humira, its best-selling drug for years, begins to lose patent protection. The company has pursued acquisitions in recent years to bolster its growth prospects, including a massive $63 billion acquisition of Botox maker Allergan in 2020. More recently, it spent $10 billion to acquire cancer company ImmunoGen and $8.7 billion to add neuroscience drugmaker Cerevel Therapeutics.
Since growth is still a big priority for AbbVie, the stock could remain a good buy for the foreseeable future.
Big-box retailer Walmart is another great example of a stable but growing company to invest in. Love it or hate it, there’s no doubt that Walmart is a staple for many consumers across the country.
In five years, Walmart stock has generated a return of about 110%. At just over 1%, the return is somewhat modest and lower than that of the S&P500 average 1.3%. But since 1974, when it first started paying dividends, Walmart has proven to be a solid option for income investors.
Over the next twelve months, the company generated revenues of $665 billion with profits of $15.6 billion. And Walmart is still eyeing more growth opportunities as it plans to open more stores and acquire the TV maker Vizio continues, it could be a potential catalyst for its advertising activities. It has also expanded its online delivery over the years, and its Walmart+ subscription represents another growth opportunity for the company.
While Walmart seems like a good, safe stock to buy with reliable dividend income, it also makes for a solid growth investment that you can hold on to for years to come.
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David Jagielski has no position in the stocks mentioned. The Motley Fool holds positions in and recommends AbbVie, Abbott Laboratories, and Walmart. The Motley Fool has a disclosure policy.
2 Dividend Kings That Would Have Doubled Your Money in 5 Years, originally published by The Motley Fool
