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An effective approach to portfolio development involves investing in stocks that consistently grow dividends over time. These dividend growth companies offer a track record of outperforming the S&P 500 and increasing income streams.
Holding robust dividend growth stocks at a fair price for the long term can deliver nice returns. Even an initial investment of $1,000 can grow by hundreds of dollars annually through compounding. Discover three promising investment prospects for your portfolio.
VISA
Visa (NYSE:V) is the world’s leading payment network. Every time a credit or debit card with the Visa logo is hacked, Visa earns a small fee. Visa receives the fee for each transaction from the consumer’s bank or credit account to the merchant’s bank account.
Instead, it partners with banks to offer Visa-branded cards. Retailers worldwide choose these cards because they are widely accepted. Visa’s business model is simple: it aims to expand its customer base and increase payment volume.
Despite processing $15 trillion in payments across 276 billion transactions last year, the company still sees growth potential, especially in foreign markets. In the second quarter, cross-border transactions increased by 16% compared to the previous year, increasing payment volume by 8%.
Visa’s extensive network allows Visa to capitalize on rising payment volumes, thereby increasing operating margins. This growth led to an increase in operating profit of 8.5% in the first half of the year. It delivered strong free cash flow growth and supported a growing dividend. This is part of the broader capital return strategy.
Visa marked its 16th year of dividend increases in October by increasing its payout 16% to $0.52 per share. Visa has a comprehensive capital return policy. Below that, investors can expect growing dividends. This is the result of a $25 billion share buyback authorization.
T-Mobile
T-Mobile (NASDAQ:TMUS) recently entered the dividend-paying scene, joining an industry long known for its high-yield companies.
For more than ten years, T-Mobile has focused on expanding its customer base. It invested in network infrastructure, obtained mobile spectrum licenses and promoted its products. After the merger with Sprint, T-Mobile’s customer base now competes with its largest competitors. This allows it to make the most of its fixed network costs and generate significant free cash flow.
T-Mobile executives expect to generate between $16.4 billion and $16.9 billion in free cash flow this year. The company uses this money for the new dividend, which started last fall, and for the repurchase of its own shares. T-Mobile has used $4.4 billion of its buyback authority to date; $11.7 billion remains for the remainder of the year.
On May 28, T-Mobile announced it would acquire nearly all of UScellular’s wireless business, including its wireless customers and stores, for approximately $4.4 billion.
T-Mobile is a leader in adding postpaid customers and now offers home internet. It serves more than 30 million postpaid accounts from 99 million customers and has more than five million home internet connections.
Metaplatforms
Meta Platforms (NASDAQ:META) recently entered the dividend-paying market. In February, it startled investors by paying out a small dividend when it announced its fourth-quarter earnings figures.
Meta operates Facebook, the largest social network in the world. It has more than three billion monthly active users on Facebook alone. Through platforms such as Instagram, WhatsApp and Messenger, Meta reaches more than 4 billion unique users every month. This broad reach makes it very attractive to advertisers.
In the first quarter, advertisers spent an impressive $35.6 billion on Meta’s apps, an increase of 27% year over year. Meta is investing significantly in artificial intelligence (AI) to support this growth, with annual AI-related spending reaching tens of billions of dollars.
Despite these substantial investments, Meta continues to deliver significant returns to shareholders. The newly added dividend is a paltry fraction of the larger capital return program, which includes a $66 billion share buyback authorization starting at the end of the first quarter.
Looking for opportunities with higher returns?
The current high interest rate environment has created an incredible opportunity for income-seeking investors to earn huge returns, but not through dividend stocks… Certain private market real estate investments offer retail investors the opportunity to take advantage of these high-yield investments. possibilities and Benzinga has identified some of the most attractive options for you.
For example, Basecamp Alpine Notes offers a target APY of 9% with a term of just three months, making it a powerful short-term cash management tool with incredible flexibility. EquityMultiple has issued 61 Alpine Notes Series and has met all payment and financing obligations with no missed or late interest payments. With a low minimum investment of just $1,000, Basecamp Alpine Notes makes it easier than ever to start building a high-yield portfolio.
Don’t miss this opportunity to take advantage of high-yield investments while interest rates are high. See Benzinga’s favorite high-yield deals.
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This article 3 Dividend-Paying Growth Stocks to Hold for Decades originally appeared on Benzinga.com
