I’ve said it before, and I’ll say it again: yields aren’t everything, especially for long-term portfolios. Dividend growth investors will agree that with five to ten years of investment horizons and compounding dividends, you can experience significant returns with dividend-growth stocks.
When looking for companies that will likely grow their dividend— investors often flock to Dividend Aristocrats and Kings. However, many of those companies are mature and already expensive. Not only that, investors with “itchy fingers,” like me, often want to buy something “now,” regardless if the companies are expensive. Perhaps it’s because we just liquidated a position, or maybe it’s because we have cash we want invested now.
So, if a healthy, growing dividend is the focus, it's often better to consider a company’s ability to grow the dividend, rather than stay fixated on its current trading price. Doing so allows us to “cast a wider net” allowing us to find quality companies that have impressive cash flow to support even further dividend growth over the long term.
So, today, let’s look at three dividend stocks that could double their payouts in the next five years.
How I Came Up With The Following Stocks
To get the list of stocks, I used Barchart’s Stock Screener to look for stocks that meet the following criteria:
- 5-Year Dividend Growth: 0.01% and above - This gives me companies who have grown their dividend.
- Number of Analysts: 16 and above - The more consensus we have, the better.
- Current Analyst Ratings: 4.5 to 5 (Strong Buy) - Only the best will do.
- Annual Dividend Yield: 0.50% and above.
- Dividend Payout Ratio: 25% and below - The higher the ratio, the lesser the chances the company’s dividend can double.
This screen yielded twenty results. To get my list of dividend stocks that could double, I clicked the heading “Div Payout%” to sort the companies from lowest to highest dividend payout ratio, then checked each company’s dividend history to see if they showed regular dividend payouts and increases, which I’ll define as paying dividends on a regular schedule, for at least the last five years.
HCA Holdings, Teck Resources, and Elevance Health have had inconsistent payouts, so I’ve removed them from the list. That leaves us with McKesson Corp, Mastercard, and Visa.
McKesson Corp (MCK)
Healthcare drives the nation forward, and McKesson Corporation stands at the center of the industry. The company doesn’t just distribute pharmaceuticals—it owns a nationwide network of healthcare solutions. McKesson tackles critical challenges such as improving medication access and further improving medical supply chains. Beyond our borders, the corporation brings its expertise to European and Canadian markets through diversified operations.
McKesson Corporation's latest quarterly report reveals a financial result with year-over-year movements in major metrics. The company’s top line increased to $79.28 billion from $74.48 billion the previous year. However, McKesson's bottom line experienced a slight dip, decreasing to $915 million from $958 million. The company attributed this marginal decline to an increase in non-controlling interest.
Nevertheless, McKesson maintains a healthy financial outlook. It has a (ttm) annual EPS of $28.03 and pays an annual dividend of $2.84, which translates to a conservative payout ratio of 8.80%. Speaking of dividends, McKesson's commitment is evident in its 5-year dividend growth of 58.94%.
Meanwhile, Wall Street analysts remain positive on McKesson's prospects, with a consensus strong buy rating.
Mastercard Inc (MA)
Next in our analysis is a prominent name in the payments industry: Mastercard Inc. This tech giant connects millions of consumers, businesses, and banks worldwide through electronic transactions. From credit cards to digital wallets, Mastercard handles it all.
In addition to payment processing, the company invests in modern solutions like instantaneous transactions and top-of-the-line cybersecurity. You can sleep well at night knowing your money’s safe.
Financial performance continues to impress, as the latest quarterly report shows year-over-year improvements. Revenue inched upward to $6.96 billion from $6.27 billion, while net income experienced a more substantial increase to $3.26 billion from $2.84 billion.
Mastercard’s (ttm) annual EPS is $13.40, while its annual dividend is $2.64, with a payout ratio of 18.15%. Notably, the 5-year dividend has reached an impressive 128% growth rate. Such figures paint a picture of financial health and positive dividend management.
Overall, market sentiment is positive for Mastercard, with a consensus among 37 Wall Street analysts resulting in a strong buy rating.
Visa Inc (V)
With current technologies, money moves at lightning speed across the globe, and Visa Inc. is one of the prominent names that has made this possible. Just like our second contender, Mastercard Inc., Visa Inc. connects everyday people, stores, companies, banks, and even governments, and it does so in over 200 countries.
The company’s extensive network processes thousands of daily transactions—from when you swipe your card to when the merchant gets paid. But it doesn't stop there. They're also developing new ways to make payments safer and faster, whether you're a regular Joe or a big corporation.
Visa’s latest quarterly financials are encouraging. Revenue increased to $8.9 billion from $8.12 billion, while net income rose to $4.87 billion from $4.16 billion. Although there isn’t much movement, the figures translate to a favorable market position, given the sector's volatility.
Meanwhile, shareholder value remains a priority, with the company paying an annual dividend of $2.08 with a ttm EPS of $9.67. Its modest payout ratio of 18.63% also suggests lots of room for future dividend increases. Indeed, they’ve increased their dividend 165.06% over the past five years, and have no reason to believe the gravy train will stop anytime soon.
Wall Street analysts also overwhelmingly favor this stock, scoring 4.66 out of 5 from 35 experts who issued a strong buy rating.
Final Thoughts About Dividend Stocks That Could Double Their Dividend
Just because a company pays a dividend doesn’t mean it will tomorrow, let alone increase it. The companies on this list are leaders in their field, have healthy balance sheets, and have the potential to increase their dividends in the future. As usual, it’s important to do your due diligence before making any purchase. Review the company’s financials, recent news, and, of course, its history of dividends (if that’s important to you) before hitting the “buy” button.
On the date of publication, Rick Orford had a position in: V , MA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
