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Sweet Spot: 3 US Stocks with Growth and Dividends

·5-min read
Nike Shoes (Orange and White)
Nike Shoes (Orange and White)

Most people will either classify themselves as either growth investors or income investors.

However, it’s possible to get the best of both worlds if you search carefully.

The sweet spot is finding stocks that provide decent growth along with some dividends that help to boost your passive income flow.

Of course, the compromise is that you need to find a balance between growth and yield.

Pure growth stocks will provide you with attractive capital gains while pure dividend stocks ensure you enjoy a high yield.

Stocks that offer both tend to balance these two attributes, but investors can look forward to steady, sustained growth over the long term if they choose strong companies.

Here are three US stocks that provide that tantalising mix of growth cum dividends.

Tractor Supply Company (NASDAQ: TSCO)

Tractor Supply is the largest rural lifestyle retailer in the US, selling a variety of farm and household items ranging from lawnmowers to tractors to power tools and gardening supplies.

As of 26 June this year, the company operated 2,016 Tractor Supply stores in 49 states and also owned 178 Petsense stores in 23 states selling pet-related merchandise.

The company has grown its top and bottom lines steadily over the last five years.

Net sales rose from US$6.8 billion in 2016 to US$12.7 billion in 2021, while operating profit grew 88.3% over the same period to US$1.3 billion.

At the same time, net profit more than doubled from US$437.1 million to US$997.1 million.

Tractor Supply’s dividend has also risen in tandem with its net profit, soaring 126.1% from US$0.92 per share to US$2.08 over the last five years.

The business momentum has continued into 2022, with the company reporting an 8.3% year on year increase in sales for its first half (1H2022).

Over the same period, operating profit rose 7.4% year on year to US$796.3 million.

Likewise, net profit edged up 5.9% year on year to US$583.7 million.

Despite the smaller rise in profit, Tractor Supply has declared a massive increase in dividends.

1H2022 dividend stood at US$1.84, up 77% year on year from the previous period’s US$1.04.

Meanwhile, the company continues to build up its customer base through its loyalty program, Neighbor’s Club.

The most recent quarter saw members rise 24% year on year to more than 26 million.

Tractor Supply believes it has a significant opportunity to grow further, with a total addressable market of US$180 billion of which it occupies just a 7% market share.

Nike (NYSE: NKE)

Nike is one of the largest sports apparel and footwear brands in the world.

The company is well-known for its innovative footwear that’s worn by top athletes in a variety of sports.

Nike has reported growing revenues since the fiscal year ended 31 May (FY2013), when revenue stood at US$25.3 billion.

By FY2022, revenue had climbed to US$46.7 billion, for a compound annual growth rate of 7% over nine years.

Earnings per share has more than doubled over the same period, going from US$1.34 in FY2013 to US$3.75 in FY2022.

Dividends have also risen sharply, going from US$0.41 in FY2013 to US$1.19 in FY2022.

John Donahoe, Nike’s CEO, believes that the brand can connect deeply with customers and has a competitive edge in digital channels.

Coupled with an innovative pipeline of new products, he believes that the company can continue to grow in the future.

Visa (NYSE: V)

Visa is one of the world’s largest electronic payment networks.

The company hosts over 100 million merchant locations and 15,100 financial institutions and has 3.9 billion credit and debit cards in circulation around the world as of 30 June 2022.

Visa has grown steadily over the last five years, and its numbers demonstrate the operating leverage that the business enjoys.

Net revenue stood at US$15.1 billion for fiscal year ended 30 September 2016 (FY2016) and has risen by close to 60% to US$24.1 billion in FY2021.

At the same time, operating and net profit have risen by 100.5% and 105.5% over the same period to US$15.8 billion and US$12.3 billion, respectively.

Meanwhile, Visa’s quarterly dividend per share has also increased every single year without fail since its IPO in 2008.

It started at US$0.0263 per share in 2008 and is now at US$0.375, rising by close to 22% per annum over close to 14 years.

The payment behemoth’s growth momentum remains strong for the first nine months of fiscal 2022 (9M2022).

Net revenue rose 22.7% year on year to US$21.5 billion while net profit jumped 26.2% year on year to US$11 billion.

How do you decide if a growth stock is worth your money? There is no shortage of stock ideas today, but is a particular stock suitable for you? Find out more in our latest FREE report, How To Find The Best US Growth Stocks For Your Portfolio. Click HERE to download the report for free now!

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Disclaimer: Royston Yang owns shares of Nike, Visa and Tractor Supply Company.

The post Sweet Spot: 3 US Stocks with Growth and Dividends appeared first on The Smart Investor.

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