Dividend Stocks

7 Dividend Stocks with Double-Digit Earnings Growth

I don’t know many investors who don’t like dividends. However, there are many investors who would opt for either dividend income or earnings and revenue growth. This divide between growth and dividend investors has left a rift among dividend stocks. But does there need to be one? Not necessarily. 

While we can find growth stocks with a minuscule dividend — hello Nvidia (NASDAQ:NVDA) — we can also find dividend stocks that have growth as well. After all, the companies that are able to pay a stable, growing dividend often have a solid business behind them. 

So, for this article, I wanted to take a look at high-quality companies that have both growth and a decent dividend payout. Specifically, I am looking for names that have forecasts for double-digit earnings growth. The more dependable the dividend and the stronger the earnings, the better. 

Believe it or not, there are not that many dividend stocks that fit the bill. But here are the seven promising names that I’ve found: 

  • Procter & Gamble (NYSE:PG)
  • Home Depot (NYSE:HD)
  • Toyota Motors (NYSE:TM)
  • Texas Instruments (NASDAQ:TXN)
  • 3M (NYSE:MMM)
  • Realty Income (NYSE:O)
  • Pepsico (NASDAQ:PEP)

Dividend Stocks with Earnings Growth: Procter & Gamble (PG)

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The first name on this list is one of the dividend kings, so I’m glad that P&G was able to make the cut. In May, Procter & Gamble paid out a dividend of roughly 87 cents a share, a 10% increase from the prior dividend. 

That marked the company’s 65th consecutive year of a dividend raise. Think about that for a minute; not only has this company paid its dividend for more than six decades, it has raised that payout in each one of those years as well. With a 2.58% dividend yield and a consistently rising payout, PG stock is one worth owning. But the company even has solid growth, too. 

P&G is forecast to grow earnings by about 10% this year. Analysts expect that growth on 6.5% revenue growth, so we should see a slight boost to margins as well. Estimates temper down in 2022, calling for earnings growth of roughly 6%, but that’s still decent for a company like P&G.

Is this the sexiest stock out there? No, not unless you love detergent and household items. But as far as portfolios go, PG stock has been an extremely rewarding pick of the dividend stocks to hold over the years. 

Home Depot (HD)

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Home Depot is a little newer to the dividend game, but it’s not wasting any time stepping up to the plate as one of the dividend stocks. The company currently pays out a 2.10% yield or $1.65 per share. Like P&G, that’s after a 10% year-over-year boost. 

Home Depot’s main competitor, Lowe’s (NYSE:LOW), also has a focus on its dividend. It just gave its payout a 33% boost, its 25th consecutive year with a raise. Lowe’s has also been consistently paying a dividend for more than five decades. 

So, Lowe’s may have Home Depot beat when it comes to dividend longevity, but the latter is still a formidable competitor. For example, HD has raised its dividend by more than 10% annually for at least a decade. That’s pretty darn impressive and has been a huge reward for long-term investors — particularly with shares climbing almost 800% in that span. 

Given the booming state of the housing market, it should also be no surprise that Home Depot has been crushing it, too. Analysts expect almost 19% earnings growth this year as consumers continue to renovate, upgrade and invest in their homes. 

It’s hard to see that trend slowing much in the future. While Lowe’s has a lower dividend yield (1.66%), it’s forecast to grow earnings nearly 24% this year. As such, really both HD stock and LOW stock could be included on this list. 

Dividend Stocks with Earnings Growth: Toyota Motors (TM)

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There’s been a renewed interest in owning automakers lately. Whether that’s a budding long-term secular trend or a short-term post-coronavirus phenomenon, we don’t know yet. Either way, it now brings our attention to Toyota Motors for this list of dividend stocks. 

Toyota was the largest automaker in the world by market capitalization. That is, until Tesla (NASDAQ:TSLA) came exploding onto the scene in 2020. The electric vehicle (EV) maker obliterated its foes by market cap, amassing such a size that it quickly became one of the 10 largest companies in the country. 

However, Tesla’s recent acceleration doesn’t make Toyota a slouch by any means. For one, this company is also investing its resources in alternative-fuel vehicles and is looking for ways to heighten its growth. Sure, TM stock has not gone through a Tesla-like rally, but it has enjoyed a strong run so far. 

As of June 2021, TM stock hit a new all-time high — $185.38 — not something many other auto stocks can say. Further, shares are up 40% over the past one year and about 15% year-to-date (YTD). The latter figure outpaces the S&P 500 (albeit, barely). 

Finally, while Toyota shares may need a rest, investors can lean on the stock’s 2.75% dividend yield. 

Texas Instruments (TXN)

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Next up on this list of dividend stocks is a name in the semiconductor space, which continues to do well. Demand remains high while supply remains tight. That has stretched across multiple industries as the novel coronavirus continues to impact supply chains. 

But for Texas Instruments, the company continues to hum along. Analysts expect 21% revenue growth this year alongside 28% earnings growth. Additionally, the company pays out a 2.17% dividend yield. Again, that’s not monstrous, but TXN’s growth profile suggests it should be investing in future opportunities, too (vs. just paying out a higher yield). 

Typically, when investors look for semiconductor stocks, they want the sexiest picks — they want the Advanced Micro Devices (NASDAQ:AMD) of the world. However, many investors tend to find double-digit earnings and revenue growth pretty attractive as well. To that end, “[t]he most owned semiconductor stocks by U.S. long-only and hedge-fund active fund managers” were NVDA stock and TXN stock as of May.

Many know Texas Instruments as the calculator maker, but it goes much further than that. This company is one of the 10 largest semiconductor companies in the world. And it services multiple industries and sectors, including automotive, computers, industrials, communications, satellites and more. 

Dividend Stocks with Earnings Growth: 3M (MMM)

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Like P&G, 3M is a dividend champion. This pick of the dividend stocks hasn’t just paid its dividend for more than six decades, but has actually raised the payout for 63 consecutive years. That’s incredibly impressive when you think about the economic problems that have cropped up over the years. Given these economic swoons, management’s commitment to the dividend has to be admired. In fact, “3M has paid dividends to its shareholders without interruption for more than 100 years.

Now, even after a pandemic-disrupted year, 3M is expected to grow its earnings by almost 10%. If achieved, MMM stock will trade at less than 20 times earnings, which isn’t bad for a dependable 3.04% dividend yield.

Plus, with a “return to normal” underway in the United States, the company should also enjoy steady demand throughout 2021. The hope is that Europe, Asia and the rest of the world will also experience a return later this year and into 2022, paving the way for industrial companies like this one. 

If that’s the case, we could be looking at multiple years of growth for 3M and its peers. While some industrials were doing quite well prior to Covid-19, 3M was admittedly struggling a bit — or, at least its stock price was. Hopefully that changes going forward.

Realty Income (O)

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Realty Income has been one of investors’ favorite real estates investment trusts (REITs). Known as “The Monthly Dividend company,” this name has been incredibly dependable when it comes to its payout ever since it came public in 1994. 

In fact, despite the Great Recession and the novel coronavirus in 2020, Realty Income has continued to be a beacon of stability for investors — even if the O stock price has swooned. From peak to trough, Realty suffered an over 50% dip in 2020, and also suffered a similar drop during the previous bear market of the financial crisis. Clearly, these periods were not kind to The Monthly Dividend company, even though patient investors have been rewarded. 

While shares are just below the 52-week high, changing hands at about $68, Realty Income still yields 4.15%. Historically, that’s a pretty good payout for this company. However, the estimates are even better. Currently, analysts expect about 30% earnings growth this year and roughly 11% growth in 2022.

With more clarity on the economy coming by the week, perhaps estimates for next year will inch higher over time. Either way, this one of the dividend stocks is one we can count on. 

Dividend Stocks with Earnings Growth: Pepsico (PEP) 

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Last on this list of dividend stocks, I would be remiss if I didn’t mention Pepsico when talking about companies that combine solid growth and a nice dividend. On top of this feature, though, Pepsico has also had excellent management over the years, accumulating great brands that resonate with consumers. 

Today, PEP stock pays out a 2.94% dividend yield, which is a bit higher than most of the other names on this list. Further, analysts expect the company to grow its earnings just over 10% this year and about 8% next year. Of course, the latter estimate could be conservative, though. 

What’s more, this company continues to churn out solid sales growth as it continues to offer excellent products. That goes far beyond the Pepsi soda brand as well as beyond PEP’s other soda offerings like Mountain Dew and Sierra Mist. In addition to these products, Pepsico owns other important beverage brands like Aquafina, Lipton and Gatorade as well as snack brands like Doritos, Lay’s and more

Now, there’s a push toward healthy and Pepsico is trying to ride that wave, too. However, good old-fashioned snacking isn’t going anywhere either.

On the date of publication, Bret Kenwell held a long position in NVDA and AMD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell