Many companies have a long history of increasing their dividends. A few of them have already boosted their payouts in 2024. Many more will likely do so in the coming months. Here are seven stocks primed to hike their payouts by around 10% in 2024.
Broadcom
Broadcom (AVGO -2.04%) has done a phenomenal job growing its dividend since initiating the payment in its 2011 fiscal year:
AVGO Dividend data by YCharts
The semiconductor and software company most recently hiked its payout by 14% last December, marking its 13th straight year of dividend increases.
Broadcom is in a strong position to continue growing its payout briskly in 2024. The company recently completed its transformational acquisition of VMware. That deal will help boost its revenue by 40% this year. Meanwhile, it's capitalizing on the artificial intelligence (AI) megatrend, which should drive accelerated revenue and earnings growth. That will give it even more cash to pay to shareholders in the coming years.
Domino's
Domino's Pizza(DPZ 0.25%) dividends have been growing briskly. The pizza purveyor gave its investors a 10% raise last year and has more than doubled its payout over the past five years.
The leading pizza seller is in a strong position to continue growing its payout at an appetizing rate. Its "hungry for more" strategy aims to drive more sales and profit growth over the next five years. It aspires to grow its annual operating income by more than 8% annually during that period. That should enable it to generate significantly more free cash flow to return to shareholders through repurchases and a fast-growing dividend.
Equinix
Equinix (EQIX -0.53%) has steadily increased its dividend since converting to a real estate investment trust (REIT) in 2015. The data center REIT hiked its payment twice last year. It increased its dividend by 10% in February and another 25% in October.
The company expects to continue hiking its dividend in the future. It sees growing demand for data centers driving 7% to 10% annual growth in its adjusted funds from operations (FFO) per share through at least 2027. Given its low dividend payout ratio (45% last year), the company expects to grow its dividend per share at a more than 10% annual rate over the coming years.
FactSet
FactSet Research Systems (FDS -0.09%) has grown its dividend at a 9.2% compound annual rate over the last six years, including giving investors a 10% raise last May. The financial data and analytics company is in an excellent position to continue growing its payout at a healthy clip.
The company expects to deliver 6% to 9% adjusted earnings-per-share growth this fiscal year. Meanwhile, it has a low dividend payout ratio (30% of its net income last year) within its medium-term target range (25% to 30%). That should put FactSet in the position to increase its payout at a high-single-digit rate this year, with the potential to give investors another 10% raise.
Intercontinental Exchange
Intercontinental Exchange (ICE -0.02%) has grown its dividend at a double-digit annual pace since 2013, including increasing it by 11% last February. The exchange operator aims to raise its dividend as its earnings grow.
The company took a big step to boost its earnings growth last year, closing its nearly $12 billion acquisition of Black Knight to bulk up its mortgage technology business. Intercontinental Exchange expects the acquisition to be immediately accretive to its earnings with further increases as it captures cost savings. That builds on the company's already strong base. It delivered 11% adjusted earnings-per-share growth in the third quarter and 15% adjusted free-cash-flow growth through the first nine months of the year.
Paycom
Paycom Software (PAYC 0.53%) just started paying dividends last year, declaring its first payment in May. However, the payroll software company is in an excellent position to grow its payout briskly in 2024 and beyond.
The company set its initial payment low (about 20% of its operating cash flow and around 25% of its earnings). That's much lower than the 55% or more payout ratios of its larger rivals in the payroll sector. Meanwhile, Paycom is growing a lot faster than those peers (10% to 12% expected revenue growth in 2024, compared to 6% to 7% for its two biggest peers). Add a cash-rich balance sheet, and Paycom is in a prime position to hike its payout by more than 10% in 2024.
Prologis
Prologis (PLD 0.53%) has historically delivered above-average dividend growth. The industrial REIT has grown its payout at a more than 12% compound annual rate over the last five years, including by 10% last February.
The global warehouse operator seems likely to give its investors another double-digit raise this year. It grew its core FFO by nearly 11% per share last year. Meanwhile, it expects its FFO to rise by around 9% per share at the midpoint of its guidance range in 2024 (with further upside potential from acquisitions). With a low dividend payout ratio for a REIT (less than 70% last year) and a fortress-like balance sheet, Prologis could easily afford to hike its dividend by another 10% this year.
Expect to collect even more income from these dividend stocks in 2024
Many companies will likely give their investors a raise this year. Broadcom, Domino's, FactSet, Equinix, Intercontinental Exchange, Paycom, and Prologis are among those primed to hike their payouts by around a double-digit rate in 2024. That makes them excellent options for those seeking a rapidly rising income stream.
Matthew DiLallo has positions in Broadcom, Domino's Pizza, Equinix, FactSet Research Systems, Intercontinental Exchange, Paycom Software, and Prologis. The Motley Fool has positions in and recommends Domino's Pizza, Equinix, FactSet Research Systems, Paycom Software, and Prologis. The Motley Fool recommends Broadcom and Intercontinental Exchange. The Motley Fool has a disclosure policy.
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Regarding the concepts used in the article you provided, let's break them down:
Dividend Growth:
Many companies have a long history of increasing their dividends. This means that they regularly raise the amount of money they distribute to their shareholders as dividends. Dividend growth is often seen as a positive sign by investors, as it indicates that a company is generating more profits and is willing to share them with shareholders.
Stocks:
In the context of the article, stocks refer to shares of ownership in a company. When you buy stocks, you become a partial owner of the company and are entitled to a portion of its profits, which can be distributed as dividends. Stocks can be bought and sold on stock exchanges.
Dividend Payouts:
Dividend payouts are the amounts of money that companies distribute to their shareholders as dividends. These payouts can be in the form of cash or additional shares of stock. Dividend payouts are often seen as a way for companies to reward their shareholders and attract investors.
Dividend Increase:
A dividend increase occurs when a company raises the amount of money it pays to its shareholders as dividends. This can be a sign of financial strength and confidence in the company's future prospects. Dividend increases are often well-received by investors, as they can lead to higher returns on investment.
Dividend Yield:
Dividend yield is a financial ratio that indicates the annual dividend income an investor can expect to receive from owning a stock, expressed as a percentage of the stock's current price. It is calculated by dividing the annual dividend per share by the stock's current price. Dividend yield is often used by investors to compare the income potential of different stocks.
Real Estate Investment Trust (REIT):
A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. REITs are required by law to distribute a significant portion of their earnings to shareholders in the form of dividends. Investing in REITs can provide investors with exposure to the real estate market and the potential for regular dividend income.
Adjusted Funds from Operations (FFO):
Adjusted funds from operations (FFO) is a financial metric used by REITs to measure their cash flow from operating activities. It is calculated by adding depreciation and amortization expenses to net income and subtracting gains from the sale of properties. FFO is often used as a measure of a REIT's ability to generate cash flow and pay dividends to shareholders.
Compound Annual Growth Rate (CAGR):
Compound annual growth rate (CAGR) is a measure of the average annual growth rate of an investment over a specified period of time. It takes into account the compounding effect of reinvested dividends or interest. CAGR is often used to compare the performance of different investments over time.
I hope this breakdown helps you understand the concepts used in the article. If you have any further questions or need more information, feel free to ask!
