Portfolio Pillars: 3 Dividend Growers for Enduring Wealth

Having reliable stocks in your portfolio will reduce your stress and can help you generate stable returns. Combine stability with dividend payments, and your cash flow can go up every year.

Investors seeking long-term wealth can benefit from adding dividend growth stocks to their portfolios. These companies have lower yields than average but grow their dividends at faster rates than most corporations. Also, dividend growth stocks tend to appreciate more than high-yield stocks, and some even outperform the stock market.

Let’s examine some portfolio pillars to consider for enduring wealth. 

Mastercard (MA)

Mastercard (NYSE:MA) is a leader in the credit and debit card industry. More than doubling over the past five years, it is up by 33% over the past year. Mastercard only has a 0.60% dividend yield. Not only has it outperformed many stocks, it also has an impressive dividend growth rate.

In addition, Mastercard hiked its quarterly dividend from $0.57 to $0.66 per share, which is up by 15.8% year over year (YOY). The company delivers solid financial growth and profit margins that suggest plenty of appreciation and dividend hikes in the future. 

MA reported 13% YOY revenue growth and 11% YOY net income growth in Q4 2023. Also, the company ended up with an impressive 43.1% net profit margin. 

Healthy consumer spending helped the fintech company achieve double-digit growth rates. Hence, Mastercard is in a good position to reward long-term investors since people will always use credit and debit cards. The company makes a small percentage of each transaction. It has resilience during economic uncertainty and can continue to grow during strong economic cycles.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) has been one of the most reliable stocks for long-term investors. The stock is up by 62% over the past year and has gained 266% over the past five years. The company has emerged as a leader in artificial intelligence (AI), not only talking about the technology but actually applying it at scale.

Also, the firm has many growth drivers that contributed to an 18% YOY revenue increase in Q2 FY24. Impressively, Microsoft Cloud revenue led the charge and was up by 24% YOY. And, the company’s Productivity and Business Processes segment performed well, up by 13% YOY.

Microsoft successfully returns capital to shareholders and continues that trend in Q2 FY24. During the quarter, Microsoft returned $8.4 billion to shareholders via share repurchases and dividends. The company increased its quarterly dividend near the end of 2023 from $0.68 to $0.75 per share, a 10.3% YOY increase.

Therefore, these dividend hikes will increase your personal yield on Microsoft stock over time. The tech giant also offers several growth verticals and exposure to the promising AI industry.

Meta Platforms (META)

Meta Platforms (NASDAQ:META) has suddenly become a portfolio pillar for dividend growth investors due to a strong ad market recovery and a renewed focus on profitability. Furthermore, META has almost tripled over the past year, and the recent dividend announcement certainly helped. 

Meta Platforms will give out its first dividend at the end of March. The quarterly dividend is currently $0.50 per share, but that number will go up quickly. I believe Meta Platforms will raise its dividend by at least 10% per year for several years. Revenue growth more than tripled YOY in Q4 2023. A 25% YOY increase in revenue suggests net income growth can continue. The net profit margin came in at 35.0%. 

Additionally, daily and monthly active users inched higher by 8% and 6% YOY, respectively. These numbers aren’t bad since Meta Platforms has the largest social network and plenty of others. However, it’s even more impressive that revenue growth significantly outpaced growth rates in active users. So, this indicates Meta Platforms can still increase its average revenue per user. 

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.