Dividend Champions allow investors to receive extra cash without doing any additional work. Once you analyze a stock and decide it’s a good long-term investment, you will continue to receive dividends. The stock price will fluctuate, but reliable corporations tend to appreciate over time.
Finding these dividend champions early can set you up for a better retirement. If retirement years are on the horizon, accumulating these types of stocks can pay off when it’s time to cover expenses without a salary. Investors looking to build dividend stock portfolios may want to consider these top dividend champions.
Visa (V)
Visa (NYSE:V) has offered security and growth to investors for many years. The fintech company has high net profit margins and generates revenue with every Visa credit or debit card transaction.
Visa’s latest financials indicate consumer spending remains strong. Revenue increased by 9% year-over-year while net income jumped by 17% year-over-year. Once again, Visa’s net profit margins exceeded 50% at the start of fiscal year 2024.
Cross-border volume growth was a major catalyst for the company’s strong quarter. This segment experienced 16% year-over-year revenue growth. Visa has gained 29% over the past year and is up by 90% over the past five years. The stock has a 0.75% dividend yield with an impressive growth rate.
Visa raised its quarterly dividend from $0.45 per share to $0.52 per share by the end of 2023. That’s a 15.6% year-over-year increase. The dividend is sustainable and has a lot of room for growth based on the stock’s 21.54% dividend payout ratio. Visa can comfortably double its dividend if it wants, but leadership puts its money to use with acquisitions and stock buybacks.
Badger Meter (BMI)
Badger Meter (NYSE:BMI) is another one of the top dividend champions to consider. At the moment, the water solutions company only has a $4.6 billion market cap but it’s up by 162% over the past five years. The stock is also up by 32% over the past year and has a 0.70% dividend yield.
Similar to Visa, BMI offers high dividend growth. The company hiked its quarterly dividend from $0.225 per share to $0.27 per share in the middle of 2023. That’s a 20% year-over-year increase. It’s normal for the company to raise its dividend by at least 10% per year, and a 33% dividend payout ratio suggests that growth can continue.
Badger Meter also reports impressive financials. Total sales were up by 24% year-over-year in Q4 2023. Net earnings reached $24.7 million in the quarter compared to $17.5 million in the same period last year. That’s a 41.1% year-over-year increase.
Main Street Capital (MAIN)
Main Street Capital (NYSE:MAIN) is an investment firm that offers financing solutions for small and medium-sized businesses. The firm has criteria in place to limit losses and increase the likelihood of receiving on-time payments from customers.
The formula has worked well so far. Shares are up by 18% over the past five years – not including the stock’s 6% yield and monthly dividend payments. The actual five-year return is much higher if you include dividends and reinvest them every month.
Main Street Capital isn’t the type of stock to outperform the market. However, it’s another of the top dividend champions for retirees seeing stable cash flow from their investments. The investment firm has over $7.2 billion of investment capital under management which is managed by a team with over 100 years of collective investment experience.
Distributable net income is 159% of regular monthly dividend payments. That buffer gives the firm a lot of coverage for its monthly dividend payments.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) is one of the best dividend growth stocks on the market. The stock still has a 1.6% dividend yield despite the stock gaining 375% over the past five years. The semiconductor and software leader has kept its yield relatively high through noteworthy dividend hikes.
Broadcom raised its quarterly dividend by 14% to start fiscal 2024. The quarterly dividend per share now stands at $5.25. You will receive $21 every year just for owning a single Broadcom share. Buying more shares, reinvesting dividends, and waiting patiently for the dividend to get higher will translate into more gains.
Broadcom closed out the fourth quarter of fiscal 2023 with a 4% year-over-year dividend increase. Net income reached $3.5 billion in the quarter while EPS was $8.25. The recent acquisition of VMware will lead to rapid revenue and earnings growth in 2024. Broadcom anticipates generating $50.0 billion in fiscal 2024 including the acquisition. That’s a significant improvement from the company’s $35.8 billion in revenue during Q4 2023.
Microsoft (MSFT)
Most index funds have Microsoft (NASDAQ:MSFT) as their top position. Indices with higher concentrations in Microsoft like the S&P 100 tend to outperform indices like the S&P 500 that have it in smaller concentrations. The tech giant is the most valuable company in the stock market and has increased by 64% over the past year. The 5-year gain of 265% indicates a long-term winner, and current financials suggest that the trend can continue.
The corporation reported 18% year-over-year revenue growth and 33% year-over-year net income growth in the second quarter of fiscal 2024. Cloud and artificial intelligence led the charge in this successful quarter. Microsoft has steadily expanded its profit margins, which means there is plenty of room to offer dividend hikes.
Microsoft recently hiked its quarterly dividend per share from $0.68 to $0.75. It’s a 10.3% year-over-year increase. Microsoft usually increases its dividend by 10% or more each year. The company has a reasonable 25.86% dividend payout ratio and is rated as a “Strong Buy.” Analysts are projecting a 14% upside for the stock.
Costco (COST)
Costco (NASDAQ:COST) is the go-to destination for people who want to buy products in bulk and save money. The retailer gets a lot of foot traffic and reached nearly 128 million cardholders to wrap up fiscal 2023. That’s a lot of recurring revenue, and Costco gets additional revenue when these consumers visit its retail locations.
Costco has 875 locations throughout the world with a large presence in the United States and Canada. The firm has opportunities to expand within Europe and Asia to reach more customers. The average warehouse size is 147,000 square feet.
Costco has reliably outperformed the market with a 52% gain over the past year and a 237% gain over the past five years. Costco’s dividend yield sits at a low 0.55%, but the company is known for offering special dividends every few years. For instance, Costco announced a surprise dividend of $15 per share during the 2023 holiday season.
The special dividend seems to happen once every 2-3 years based on its dividend history. However, the firm still offers a respectable quarterly dividend along with a high growth rate. Costco hiked its quarterly dividend per share from $0.90 to $1.02 in 2023. That’s a 13.3% year-over-year increase. Costco has the financial strength to continue with its dividend hikes while offering a pleasant surprise every 2-3 years.
Cintas (CTAS)
Cintas (NASDAQ:CTAS) offers businesses several vital safety and sanitation products. The stock only has a 0.85% dividend yield but offers a growth rate that puts most corporations to shame.
The company raised its quarterly dividend per share from $1.15 to $1.35 per share in 2023. This impressive 17.4% year-over-year increase is a regular occurrence for a company that has regularly outperformed the stock market. Shares are up by 45% over the past year and have gained 204% over the past five years.
Cintas reported another strong quarter that should result in more long-term gains. Revenue increased by 9.3% year-over-year in the second quarter of fiscal 2024. Net income was also up, rising from $324.3 million to $374.6 million. That’s good for a 15.5% year-over-year gain.
Cintas isn’t an exciting corporation, and that’s not a knock by any means. The company offers an essential service. ItsIt’s innovations aren’t on the scale of artificial intelligence, but the stock offers more stability for long-term investors. Unlike most stocks that offer stability, Cintas can also outperform the market.
On this date of publication, Marc Guberti held long positions in MSFT and AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
