Investors are clamoring for a piece of tech and AI these days, which is not surprising. Microsoft and Apple—the two US companies with the highest market cap—saw triple-digit returns in the last five years. Their well-publicized performance and massively popular profiles easily make them investor favorites—so much so that some investors are growing blinders and ignoring the broader market altogether for these popular stocks and others like it.
This can be a costly mistake. While MSFT and APPL aren’t likely to topple anytime soon, tech stocks typically outperform the market during bull runs and underperform when times aren’t as good.
Meanwhile, some dividend growth stocks sit on the sidelines and experience impressive price growth (as we’ll see on their charts). In this article, we’ll look at three dividend stocks with 80%+ returns in the past year with notable 5-year dividend growth rates.
Lennox International (LII)
Lennox International has a history dating back to 1895 as a heating solutions manufacturer. Today, it’s a complete climate control solutions provider that offers ventilation and HVACR. The company is divided into three segments: Home Comfort solutions for its residential clients, Building Climate solutions for commercial properties, and Corporate and Other. LII has grown to be an all-in-one climate control provider focusing on sustainability.
Lennox International saw modest growth in 2023. Full-year revenue increased 6% to $5 billion, while GAAP diluted EPS grew 19%. LII has consistently exceeded its earnings target for the last three years. For 2024, the company expects revenue to grow about 7%.
Why Is LII On This List?
LII offers a 0.93% annual dividend yield, which is admittedly a bit on the low side. However, dividends have grown 79.42% over the past five years, making us think there is more growth to come.
It also generated an impressive 85.37% 1-year return. To clarify, this is not the choppy growth or high percentage returns that some stocks register when they experience massive but short-term price spikes. No, this is sustained price growth over the last 52 weeks, with the company reaching a new 52-week high just yesterday.
Newmarket Corp (NEU)
There has been a concerted push for electric vehicles, which some say threatens the gas-powered automobile market and supports industries like petroleum manufacturers. However, it’s unlikely that electric-powered propulsion technologies will wrench aerospace and defense industries from the likes of Newmarket Corp anytime soon.
NEU is a holdings company that serves the petroleum industry by manufacturing and distributing additives that enhance the performance of different petroleum products. Its subsidiaries include Ethyl Corporation, Afton Chemical Corporation, and American Pacific Corporation.
NEU’s latest quarterly report was a bit lackluster, with slight dips in the top and bottom lines. Yet, eagle-eyed readers might notice that the stock price didn’t suffer. Far from it actually, as it’s stock is up about 7% since its Q4 report dropped on February 1.
Why Is NEU On This List?
Newmarket Corp offers an $8.85 annual dividend, which is comfortably below its full-year 2023 EPS of $40.44, meaning the company isn’t exactly breaking its back to provide consistent dividend payouts. Five-year dividend growth comes in at 26.43%, while its 1-year returns reached 85.59%.
Williams-Sonoma (WSM)
Williams-Sonoma, the parent company of the popular Pottery Barn, offers specialty retailer products through various brands and subsidiaries. A quick peek at its website, and we’ll see a massive catalog of products that include cookware, home essentials, bedding, outdoor and garden furniture and appliances, lighting, electrics, bedding and bath products, and art and decor.
The company offers these products through direct-mail catalogs, retail stores, and e-commerce websites. Its on-site retail operations include 489 stores in the US and US territories, 20 stores in Canada, 19 in Australia, and two in the UK.
WSM’s last quarterly report (Q3’23) was quite mixed. Comparable brand revenue declined by 14.6%, while diluted EPS fell from $3.72 to $3.66 YoY. However, margins reached record highs at 17% despite notable overall decreases in customers’ discretionary spending for furniture.
The Q4 and full-year 2023 report is expected on March 14, 2024.
Why Is WSM On This List?
WSM has an annual dividend yield of 1.57%, or $3.60. Impressively, dividends have increased 100% in the last five years, despite the company only having a 22.87% dividend payout ratio. It also has an 83.90% 1-year return despite facing difficult industry conditions. Wrapping it up, the company has a safe dividend with lots of room to keep investors happy.
Final Thoughts
Past performance can give us an idea of trends but is crucially not a great indicator of future performance. Still, the companies on this list have displayed impressive growth, not only in the last year but in their overall timeline. Don’t take my word for it, though. Always conduct your own due diligence, as it’s your money on the line.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
