The 2024 market rally has led to new heights for mega-cap growth stocks like the S&P 500. However, some investors may be concerned that the rally is overextended. To ensure long-term success, it’s essential to focus on investing in quality companies that deliver on investor expectations and innovate.
Investing in dividend stocks can provide a way to collect passive income regardless of equity prices. Companies like Broadcom (AVGO), Visa (V), Salesforce (CRM), Meta Platforms (META), and Alphabet (GOOG) are well-positioned as industry leaders with the ability to raise dividends through economic cycles and volatility.
Broadcom and Visa recently announced significant dividend increases for 2025, with Broadcom hiking its payout by 11% and Visa boosting its dividend by 13%. Both companies have strong business models, growing sales and operating income, which allows them to afford increasing payouts.
Long-term investors should focus on companies that can rapidly expand their product lineups or invest in growth initiatives. Salesforce, however, has a different approach, reinvesting most of its capital return program on buybacks rather than dividends. Its low yield is due to substantial gains, not a lack of commitment to boosting payouts.
Newer dividend-paying growth companies like Meta Platforms, Salesforce, and Alphabet have also started paying dividends in 2024. While their yields are lower at the time of this writing, they are expected to make significant annual double-digit percentage raises in the future. All three companies have strong free cash flow generation despite ramping spending on AI.
Ultimately, investors should focus on total returns rather than just dividend yield. Companies like Broadcom, Visa, Salesforce, Meta Platforms, and Alphabet have runways for future earnings growth, making them dividend-growth stocks worth considering in 2025.
Source: https://www.fool.com/investing/2025/01/11/buy-dividend-growth-stock-2025