Some investors look for growth stocks that don’t offer dividends. While no dividend payments allow corporations to reinvest cash back into their businesses, this structure presents a problem for shareholders. If a stock does not offer dividends, you can only generate additional cash by selling shares.
Not every investor wants to sell shares, but non-dividend paying stocks may force investors to do just that. Luckily, you can choose from many dividend stocks that reward you with cash flow for holding on to your shares. Many corporations issue dividends to reward their investors and encourage them to remain patient.
Some dividend stocks do a better job than others. It’s possible to find stocks that can outperform the market while distributing funds to their investors. These are some of the top dividend stocks to consider.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) is a leading construction company that offers equipment and services for the industry. The stock trades at an 18 P/E ratio and offers a 1.42% dividend yield. Caterpillar has done an exceptional job of raising its dividend over the years. The corporation hiked its quarterly dividend from $1.20 per share to $1.30 per share in 2023. That’s an 8.3% year-over-year increase.
Stock gains have also been compelling. The stock is up by 25% year-to-date, has gained 59% over the past year, and rallied by 161% over the past five years. Caterpillar’s revenue growth was a bit slow at 3% year-over-year in Q4 2023 while net income surged by 84% year-over-year.
Caterpillar regularly maintains double-digit profit margins and has outperformed the stock market for several years. The company is approaching its 100th year of business and has endured many economic challenges, including the Great Depression. Investors seeking stability and growth may want to consider this stock.
United Parcel Service (UPS)
The United Parcel Service (NYSE:UPS) is a stock for dividend income investors. The stock currently offers a 4.40% dividend yield. Although UPS has normally been good at raising its dividends, the logistics company only bumped its quarterly dividend up from $1.62 per share to $1.63 per share.
Revenue and earnings haven’t been good in recent quarters. Q4 2023 revenue dropped from $27.0 billion to $24.9 billion. UPS CCEO Carol Tomé mentioned that “2023 was a unique and difficult year” where the company focused on what it could control. The stock is currently rated as a “Moderate Buy” with a projected 8% upside.
The UPS business model is stable. People will always buy products online and need UPS trucks to deliver their products. The company stands to generate revenue and earnings for its shareholders for many years. The company pays a high yield but is down by 23% over the past year.
UPS’ healthcare division can reward long-term investors. This segment is expected to double by 2026 which can strengthen the company’s revenue growth and profit margins. Growth stocks are likely to outperform UPS, but investors approaching retirement who value a high yield may want to consider this pick.
Walmart (WMT)
Walmart (NYSE:WMT) has established itself as a core piece of the American retail experience. The company offers low prices for its products and has recently made a bid to attract wealthy shoppers. This effort can bear fruit since the higher cost of living has made people more conscious of their budgets.
Walmart has a 31 P/E ratio and a 1.38% dividend yield. Shares are up by 21% over the past year and have gained 83% over the past five years. The stock is rated as a “Strong Buy” among 28 analysts with an implied 9% upside based on the average stock price.
The retailer has normally raised its dividend by the bare minimum but made a big change in 2024. Instead of only raising its quarterly dividend by $0.01 per share, the company hiked its dividend by 9% year-over-year.
Walmart reported 5.7% year-over-year revenue growth with exciting news for its e-commerce and advertising segments. Global e-commerce sales increased by 23% year-over-year while the global advertising business grew by 32% year-over-year. Walmart’s acquisition of Vizio should speed up the growth of its advertising segment.
Advertising offers higher profit margins than retail, so Walmart can exhibit profit margin expansion in the future as ads become a larger part of its business.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is one of the best dividend stocks to own. The corporation exhibits impressive growth rates and dominates in promising industries like artificial intelligence, cloud computing, software, gaming, and more.
Copilot is making it easier for Microsoft to tap into new industries and expand its presence in existing sectors. For instance, Copilot for Security will help Microsoft gain more market share in the cybersecurity industry. Copilot is still in its early innings and can become a significant long-term revenue driver for the company.
Microsoft has been leading the stock market and is a core holding of many funds and indices. Shares are up by 13% year-to-date and have gained 251% over the past five years. The stock has a 0.71% dividend yield but has been raising its dividend by 10% or more for several years. The stock still offers some upside and can generate meaningful cash flow for long-term investors by the time they are ready to retire.
American Express (AXP)
American Express (NYSE:AXP) offers growth at a reasonable price. The credit and debit card giant trades at a 20 P/E ratio and offers a 1.23% dividend yield. The company recently announced a 17% dividend hike and has regularly maintained a double-digit dividend growth rate for several years.
The fintech company reported 11% year-over-year revenue growth and 23% year-over-year net income growth. Consumer spending is still strong and even if it falters, people will still use their credit and debit cards. Cashback, credit building, and other incentives make it less appealing to switch from using an American Express card to making cash payments.
The company is aiming for 9% to 11% revenue growth for full-year 2024. Leadership also expects EPS growth rates to fall in the mid-teens for each year beyond 2026. It’s good to see American Express setting attainable multi-year goals for its guidance. Higher net interest income and increased card member spending contributed to the successful quarter.
Intuit (INTU)
Intuit (NASDAQ:INTU) offers financial and business software products like Quickbooks, Turbotax, and Mailchimp. These products generate recurring revenue for the company and have become more profitable over the years. Intuit has been able to achieve double-digit net profit margins in recent quarters thanks to higher profits.
Net income more than doubled year-over-year in the second quarter of fiscal 2024. Revenue growth came in at a solid 11% year-over-year which was led by an 18% year-over-year increase in the Small Business and Self-Employed Group segment.
Lower interest rates can give Intuit’s CreditKarma some momentum. This segment of Intuit’s business makes it easier for people to borrow money. CreditKarma’s revenue was flat year-over-year.
The stock is up by 48% over the past year and has gained 148% over the past five years. The stock has a 66 P/E ratio and a 0.55% dividend yield. Analysts have rated the stock as a “Strong Buy” and believe the stock can gain an additional 9% from current levels.
Cintas (CTAS)
Cintas (NASDAQ:CTAS) provides business supplies and safety equipment for more than one million businesses. The company’s vast customer base and growth plans have turned it into a long-term winner. The stock is up by 49% over the past year and has gained 233% over the past five years.
The stock trades at a 50 P/E ratio and has a 0.80% dividend yield. The corporation regularly raises its dividend by at least 10% per year. Cintas has maintained a compounded 21.05% dividend growth rate over the past 10 years.
The company’s Q3 FY24 financial report got more investors excited. The company reported 9.9% year-over-year revenue growth and a 22.0% year-over-year increase in net income. Cintas increased its full-year guidance for revenue and EPS. The revenue midpoint went from $9.52 billion to $9.585 billion while the EPS midpoint jumped from $14.50 to $14.90 per share. Long-term shareholders have enjoyed a combination of compelling dividend growth and stock gains.
On this date of publication, Marc Guberti held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.