As the U.S. economy gives mixed signals, investors are flocking towards reliable choices such as dividend-paying stocks for stability and growth in their portfolios. Below, I have highlighted three such dividend growth stocks: The PNC Financial Services Group, Inc. (PNC), VICI Properties Inc. (VICI), and T. Rowe Price Group, Inc. (TROW), which could offer a reliable income stream to your portfolios.
The U.S. economy is expected to continue to lose momentum in the near future as high prices and elevated interest rates sap domestic demand. In the first quarter of 2024, real GDP growth slowed sharply to 1.4% annually, a significant drop from the 3.4% seen in the previous quarter. It's likely that growth in the second quarter wasn't much faster. While a recession isn't predicted for 2024, the board expects consumer spending to cool further, leading to around 1% growth in Q3.
As we progress through 2024, economic recovery hinges on easing inflation and potential interest rate cuts by the Federal Reserve. By 2025, if inflation stays around 2% and rates drop a bit, GDP growth might get closer to its potential of 2%. Yet, uncertainty persists over the timing and extent of rate adjustments, potentially surpassing pre-pandemic norms.
According to the International Monetary Fund, U.S. interest payments on federal debt are set to rise to 3.2% of GDP by fiscal 2024, up from 2.4% in fiscal 2023 due to higher rates, which shows ongoing fiscal challenges.
Amid these economic ups and downs, dividend stocks continue to be a reliable choice for investors. They offer regular income through quarterly payouts, which usually increase as companies grow. Moreover, they present the potential for stock price gains over time, making them a lucrative investment.
With that in mind, let's dig deeper into the fundamentals of the above-mentioned dividend-paying stocks in detail:
The PNC Financial Services Group, Inc. (PNC)
PNC is a diverse financial services company in the United States. It operates through three segments: Retail Banking; Corporate & Institutional Banking; and Asset Management Group.
On July 2, the company’s Board of Directors declared a quarterly dividend on the common stock of $1.60 per share, an increase of 3% from the previous dividend of $1.55. The dividend will be payable Aug. 5, 2024, to shareholders of record at the close of business July 15, 2024.
PNC pays an annual distribution of $6.40 per share, which translates to a yield of 3.80% on the prevailing share price. Its four-year average dividend yield is 3.58%. Also, the company’s dividend payouts have grown at a CAGR of 10.3% over the past five years.
On May 6, the company announced a partnership with The TCW Group, Inc. to deliver private credit solutions to middle-market companies. This collaboration builds on 15 years of joint efforts, combining TCW's direct lending experience with PNC's middle market lending network.
The joint strategy will focus on senior secured cash-flow and asset-based loans for middle-market firms. The platform, supported by PNC and Nippon Life, aims to secure $2.5 billion in investor equity in its first year, with investments starting in Fall 2024.
PNC’s total revenue for the first quarter that ended March 31, 2024, amounted to $5.14 billion. Its non-GAAP net income attributable to common shareholders came in at $1.34 billion and $3.36 per share. Also, the company maintained a strong capital position with a Common Equity Tier 1 (CET1) capital ratio of 10.1% compared to 9.2% in the prior year’s quarter.
Analysts expect PNC’s revenue for the second quarter (ended June 2024) to increase 4.7% year-over-year to $5.54 billion, while its EPS is expected to be $3.07 for the same period. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past nine months, the stock has surged 37.6%, closing the last trading session at $168.56. It has also gained 31.2% over the past year.
PNC’s stance is apparent in its POWR Ratings. The stock has a grade B for Momentum and Stability. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
It is ranked #4 among the nine stocks in the Money Center Banks industry. Click here to access additional PNC ratings (Growth, Value, Sentiment, and Quality).
VICI Properties Inc. (VICI)
Real estate investment trust VICI owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including Caesars Palace, MGM Grand, and The Venetian Resort in Las Vegas.
It owns 93 assets across the U.S. and Canada, including 54 gaming properties and 39 other experiential venues. The company’s portfolio spans 127 million square feet and features around 60,300 hotel rooms and over 500 restaurants, bars, nightclubs, and sportsbooks.
On July 3, VICI paid its shareholders a quarterly dividend of $0.415 per share of common stock from April 1 to June 30, 2024. It pays an annual dividend of $1.66 per share, which translates to a yield of 5.64% on the current share price. The company’s dividend payouts have grown at a CAGR of 7.6% over the past five years.
In May, the company announced up to $700 million in capital for The Venetian Resort Las Vegas through its Partner Property Growth Fund. This funding will support hotel renovations, gaming floor optimization, and entertainment upgrades to enhance guest experience and property value.
The initial $400 million will be disbursed in three quarterly installments in 2024, with an additional $300 million available until November 2026. This investment aims to enhance guest experience and property value, reflecting VICI’s strategy to boost asset performance and economic productivity within its portfolio.
For its fiscal first quarter, which ended March 31, 2024, VICI’s total revenues increased 8.4% year-over-year to $951.48 million. Its net income attributable to common stockholders grew 13.7% from its year-ago value to $590.02 million, while its net income per share increased 9.6% year-over-year to $0.57.
The company’s AFFO and AFFO per share came in at $583.17 million and $0.56, respectively, compared to $528.61 million and $0.53 in the prior-year quarter. Also, its adjusted EBITDA for the quarter stood at $765.25 million, up 7.7% year-over-year.
Street expects VICI’s revenue for the third quarter (ending September 2024) to increase 5.8% year-over-year to $956.96 million. The company’s FFO for the current quarter is expected to rise 18.4% from the prior year to $0.65. Also, it topped the consensus revenue estimates in each of the trailing four quarters, which is excellent.
The stock has gained 5.4% over the past three months to close the last trading session at $29.45.
VICI’s POWR Ratings reflect this prospect. The REIT has a B grade for Quality and is ranked first out of 16 stocks in the REITs - Hotel industry.
In addition to the POWR Ratings highlighted above, one can access VICI’s Growth, Value, Momentum, Stability, and Sentiment ratings here.
T. Rowe Price Group, Inc. (TROW)
Publicly owned investment manager TROW in Baltimore, Maryland, launches and manages equity and fixed income mutual funds. The firm provides services to individuals, institutional investors, retirement plans, and financial intermediaries.
On June 18, the company introduced a new patent-pending framework that aims to assist defined contribution (DC) plan sponsors in evaluating retirement income solutions. Developed collaboratively by its global retirement strategy team and global multi-asset research team, the five-dimensional (5-D) framework addresses the industry's need for a standardized approach to assessing various retirement income products.
It enables plan sponsors, advisors, and consultants to understand better the trade-offs involved in meeting the diverse objectives of plan participants, especially those nearing retirement and retirees who wish to remain in the plan.
With 37 years of consecutive dividend growth, TROW pays an annual dividend of $4.96 per share, which translates to a yield of 4.20% on the current share price. The company’s dividend payouts have grown at an 11% CAGR over the past five years. On June 27, it paid a quarterly dividend of $1.24 per share.
For its fiscal first quarter, which ended March 31, 2024, TROW’s net revenues increased 13.8% year-over-year to $1.75 billion. Its adjusted net operating income grew 31.1% from its year-ago value to $692.40 million. The company’s adjusted net income and EPS came in at $548.50 million and $2.38, up 40.9% and 40.8%%, respectively, from the prior-year quarter.
The consensus revenue estimate of $1.78 billion for the fiscal second quarter (ended June 2024) represents a 10.6% increase year-over-year. The consensus EPS estimate of $2.26 for the to-be-reported quarter indicates a 12.1% improvement year-over-year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
TROW shares have gained 15.1% over the past nine months to close the last trading session at $118.02.
TROW’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
It also has a B grade for Momentum and Quality. TROW is ranked #14 out of 52 stocks in the Asset Management industry. Click here to see the other TROW ratings for Growth, Value, Stability, and Sentiment.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
PNC shares rose $0.29 (+0.17%) in premarket trading Monday. Year-to-date, PNC has gained 11.09%, versus a 18.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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