Impressive fundamentals don’t have to come at the cost of dividends.
Growth stocks are companies that have expanding revenue and profits because they are winning new business. And generally speaking, this often means investing heavily in the future of the business by researching new products and hiring more staff rather than spending capital on share repurchases, dividends or other tactics. But not every growth stock has given up entirely on sharing the wealth via dividends. The following growth-oriented companies offer forecasts of double-digit sales growth but also pay dividends of at least 1%. True, you can find larger yields among traditional income investments in sleepy sectors of the market. But these dynamic companies offer a bit of yield alongside a bigger chance of outperformance if they continue to grow their businesses.
CF Industries Holdings Inc. (ticker: CF)
CF is among the world’s largest producers of agricultural chemicals, including nitrogen-based fertilizers. While some companies have seen demand wane based on recent consumer trends, the demand for crops is normally quite strong — and after disruptions to global grain supplies in the wake of the war in Ukraine, farmers need CF chemicals more than ever to increase their yields. Revenue is set to surge by more than 70% this year, as earnings per share roughly quadruple over 2021 levels. The stock pays one of the smaller dividends on this list, but is still one to watch thanks to the stock’s total return — which includes dividends — of 52.7% in 2022 through market close on Nov. 29.
Dividend yield: 1.5%
Gen Digital Inc. (GEN)
Gen Digital is a cybersecurity and identity protection firm that is best known for its Norton virus protection software and its LifeLock privacy solutions service. In a digital age where bad actors are seemingly everywhere online, Gen Digital is certainly riding a trend of multiyear growth. Analysts expect revenue to leap by more than 19% in fiscal 2023 and another 17% in fiscal 2024, thanks to strong interest among both consumer and enterprise clients. Shares have lost 11.2% this year on a total return basis through Nov. 29, but they have outperformed the broader market and could be set for a comeback if the current market volatility subsides.
Dividend yield: 2.2%
Helmerich & Payne Inc. (HP)
Oil drilling services provider H&P is representative of a lot of companies in the oil patch, riding roughly a year of rising energy prices to big success. But unlike some other companies, its growth story does not appear to be a flash in the pan. For example, analysts expect revenue to surge about 47% this fiscal year and another 12% next fiscal year, based on more than 250 rigs at work globally. The company has seen its share price more than double since Jan. 1 thanks to this strong outlook, but it also pays a decent dividend on top of this great growth narrative.
Dividend yield: 2.5%
Jack Henry & Associates Inc. (JKHY)
Payments processor Jack Henry may not be one of the more popular technology stocks out there, but this financial services specialist has more than 30 years of dividend payout growth under its belt, driven by consistent growth in profits and sales that shows no sign of slowing down. With analyst expectations of about 8% revenue growth this fiscal year and next, and with the trend of “frictionless” transactions on the rise, the outlook is strong for JKHY. The company’s small $296 million debt load versus an operation valued at $13.6 billion means it has an enviable balance sheet as it grows without the burden of borrowing costs.
Dividend yield: 1%
Microsoft Corp. (MSFT)
What’s not to like about Microsoft? At roughly $1.8 trillion in market value, it’s one of the most dominant companies in the world — and, along with Johnson & Johnson (JNJ) is one of just two publicly traded U.S. stocks that get a perfect AAA credit rating on their corporate debt. Shares have been under pressure this year, in part because MSFT stock has such an outsize weighting in most index funds that have been punished in the marketwide sell-off, but its fundamentals are still sound. Analysts are projecting about 7% revenue expansion in the current fiscal year that accelerates to 13% in fiscal 2024. And while the dividend is meager from a yield perspective, since payouts began at just 16 cents annually in 2003, they have soared to $2.72 over the last 20 years. That shows that as this tech titan grows, it shares the wealth with stockholders.
Dividend yield: 1.1%
Sociedad Química y Minera de Chile SA (SQM)
Though many investors may not have heard of SQM before 2022, this is the year that the under-the-radar company has risen to international prominence. SQM is a lithium miner based in South America that is riding red-hot commodity inflation along with a booming business for electric vehicle manufacturers. This fiscal year, the company is expected to log stunning 270% growth in the top line thanks to both rising prices and rising demand for lithium. Shares have soared 96.9% through Nov. 29 this year on a total return basis thanks to these numbers, but SQM also pays a dividend that can be a bit volatile in terms of payouts but which has been amazingly generous as of late.
Dividend yield: 8.6%
Texas Roadhouse Inc. (TXRH)
Yes, that Texas Roadhouse. You may think it’s risky to invest in this southwestern steakhouse chain given the pain of COVID-19, the general move away from red meat toward healthier diets, and the pinch that inflation is putting on consumers. But TXRH stock defies expectations on all these fronts with an amazing growth story that can’t be denied. Revenue is forecast to grow 16% this fiscal year and another 10% in fiscal 2023, and shares are up by 11.3% this year on a total return basis even amid the broader pain on Wall Street. With more than 600 restaurants worldwide, there’s still ample room for this chain to keep growing, as it continues to connect and grow despite broader headwinds.
Dividend yield: 1.9%
Tractor Supply Co. (TSCO)
In the age of Amazon, Home Depot and Walmart, you wouldn’t think that a brick-and-mortar retailer with a fraction of the size would be able to compete. Well, think again, as Tractor Supply continues to make inroads with rural customers. TSCO is set to record roughly 11% revenue growth this year and another 7% next year even in a challenging environment for consumers. That’s in part because its core customers are actual farmers with tractors, but also because its lawn care and home improvement business has connected with folks who feel overlooked by the typical chains. The results show, as the stock is only down slightly on the year and has soared an impressive 220% over the last five years to lap the S&P 500 more than four times over.
Dividend yield: 1.7%
Turkcell Iletisim Hizmetleri AS (TKC)
Turkcell is a telecom based in Turkey that offers mobile, TV and fixed-line internet services to about 40 million customers. It also offers various enterprise technology services including cybersecurity and data center management in the region. Turkey’s economy suffered in 2021, as an economic crisis descended on the nation, but with the rest of the world also suffering under the yoke of inflation and with policies looking to help the nation turn over a new leaf in 2023, there are high hopes for growth here. In a digital age, Turkcell is the lynchpin to the plans for many businesses, and analysts project more than 30% revenue expansion next year. And unlike other growth stocks in emerging markets, a telecom like TKC offers a measure of reliability thanks to regular subscriptions and long-term contracts with customers.
Dividend yield: 1.8%
9 growth stocks that also pay dividends:
— CF Industries Holdings Inc. (CF)
— Gen Digital Inc. (GEN)
— Helmerich & Payne Inc. (HP)
— Jack Henry & Associates Inc. (JKHY)
— Microsoft Corp. (MSFT)
— Sociedad Química y Minera de Chile SA (SQM)
— Texas Roadhouse Inc. (TXRH)
— Tractor Supply Co. (TSCO)
— Turkcell Iletisim Hizmetleri AS (TKC)
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9 Growth Stocks That Also Pay Dividends originally appeared on usnews.com
Update 11/30/22: This story was published at an earlier date and has been updated with new information.
