Dividend-growing stocks can be a valuable addition to a portfolio. These stocks typically have stellar fundamentals and outstanding earnings growth, and can help shareholders build wealth through the magic of compounding.
Which dividend-rising stocks stand out as the best buys this month? Retail giant Walmart (NYSE: WMT) and the titan of digital payments Visa (NYSE: V) They stand out as two of the best in the category.
Find out more about these two great dividend generators here.
1. Walmart: A Retail Giant
Walmart, with its vast economic advantage, has proven time and again its ability to adapt and thrive in an ever-changing retail landscape. The company’s unmatched scale gives it a significant competitive advantage, allowing it to offer a wide range of products at unbeatable prices.
Walmart stock has been on a tear this year, up nearly 30% so far this year. While some might question its current valuation of 28 times forward earnings, the company’s growth prospects justify the premium.
Revenue is projected to increase nearly 18% over the next two fiscal years, representing exceptional growth for a company of Walmart’s size.
What really sets Walmart apart as a dividend growth stock is its impressive dividend history. The retail giant has raised its dividend for 51 consecutive years. Plus, it recently announced a 9% increase in the payout, its largest in over a decade. With a conservative payout ratio of 33%, Walmart has ample room to continue this rich tradition.
Walmart’s recent investments in artificial intelligence (AI)-powered automation are expected to reduce expenses and increase profit margins in the coming years. This strategic move not only improves the company’s competitive position but also adds an extra layer of security to its coveted dividend program.
Walmart’s unique position in the retail industry, coupled with its commitment to technological innovation and shareholder returns, make its stock worth considering this month.
2. Visa: the leader in digital payments
Visa is a formidable force in the digital payments space. Outside of China, Visa is the largest card payments company in the world.
Historically, its growth has been driven by the global shift towards electronic payments, a trend that shows no signs of slowing down. With the impending “intelligence abundance” arising from the AI revolution, this trend is likely to accelerate in the coming years.
While Visa’s current annualized yield of 0.79% may seem modest, it’s the company’s dividend growth that really impresses. With a five-year compound annual growth rate of 15.7% and a rock-bottom payout ratio of 21.7%, Visa is a standout dividend growth stock.
Visa stock is also reasonably priced at 23 times forward earnings. While this figure represents a modest premium relative to forward earnings, S&P 500 Index The index’s forward multiple of 22.6 and Visa’s projected revenue growth of over 30% during 2024 and 2025 justify its valuation.
Overall, the digital payments revolution is still in its early stages, with electronic transactions having barely overtaken cash payments globally. Visa is perfectly positioned to take advantage of this ongoing shift, laying the groundwork for sustained growth and shareholder value creation in the years ahead.
Should you invest $1,000 in Walmart right now?
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George Budwell has no position in any of the stocks mentioned. The Motley Fool has positions in Visa and Walmart and recommends them. The Motley Fool has a disclosure policy.
The 2 Best Dividend Growth Stocks to Buy in July was originally published on The Motley Fool