A lot is happening in the stock market right now. The new year is approaching, and the United States government is preparing for new leadership. Meanwhile, the broader market has begun to sell off after a notable wave since the start of 2023. No one knows what stock prices will do in the short term, but times like these should pique the interest of dividend investors who are willing to buy high-quality stocks at lower prices. Prices.
Buying and owning industry-leading companies that pay and grow dividends is a proven path to building wealth. Remember, a company needs consistent, profitable growth to increasingly pay shareholders dividends. They are a cash outlay for a company – and cannot be faked in the long term.
These four Blue Dividend Stocks It’s worth buying for its dividend today and has great growth potential in the future. Consider investing in them as potential January buys to increase your dividend income.
This mega bank has thrived over the past few years in an economy characterized by strong growth and high interest rates. Famous investor Warren Buffett recently reduced his stake in Bank of America(NYSE: BAK)but it still is Berkshire HathawayThe third largest holding is at 11.3% of the portfolio, so I don’t think that’s a major concern. The company has paid and increased its dividend for 11 straight years, and its current payout ratio is just 32% of its estimated 2024 earnings.
Additionally, analysts expect Bank of America to grow its earnings at a rate of 10% annually over the next three to five years, which could translate into dividend increases. This growth, combined with a 2.3% yield at its current price, makes Bank of America a solid stock for long-term dividend growth.
Supplemental insurance giant Aflac(NYSE: AFL) It sells insurance in the United States and Japan for various situations where the primary insurance policy is not sufficient. For example, you can get short-term disability insurance that provides income if you are unable to work due to illness or injury. The stock flies under the radar but continues to enrich its shareholders. Aflac has raised its dividend for 42 consecutive years and shows no signs of slowing down.
Aflac’s recent increase was a whopping 16%, which speaks volumes about the positive trajectory management believes the business is on. Dividends are just 27% of 2024 earnings estimates, and analysts believe the company will grow at about 7% per year over the long term. The stock yields just 1.9% today, but continued growth beating inflation should double over the long holding period.
Most people probably don’t know cm group(NASDAQ:CM)a powerful player in the financial sector working behind the scenes. The CME Group owns and operates four financial markets exchanges, including the Chicago Mercantile Exchange, where traders buy and sell derivatives on almost anything, from commodities to interest rates.
The company is very profitable. It converts more than 60% of its revenue into free cash flow to fund the quarterly dividends it has collected over 14 years (and counting), plus an additional special dividend it pays once a year. Analysts believe CME Group will continue to grow its dividend at a rate of 5% per year, which adds nicely to the stock’s 4.4% earnings per share (including special dividends).
Payment networks such as Visa(NYSE: V) Connecting people to merchants where they spend their money. The company charges a small fee every time someone swipes their Visa-branded credit or debit card. Visa is very profitable because it only facilitates payment and does not carry loans such as American Express. Therefore, Visa converts a staggering 52% of its revenue into free cash flow. The company has paid and increased its dividend every year since going public, a 16-year streak with room to continue.
The stock is yielding just 0.74%, but it’s poised for years of double-digit increases thanks to its 21% payout ratio (from 2024 earnings estimates) and expected 13% annual dividend growth over the next three to five years. Visa is such a good business that regulators are suing the company over its dominance. Investors should keep an eye on this situation, but it shouldn’t stop you from owning this dividend growth star until you have a more specific reason not to.
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Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Justin Pope He has positions at CME Group and Visa. The Motley Fool has positions in and recommends Bank of America, Berkshire Hathaway, and Visa. The Motley Fool recommends CME Group. The Motley Fool has Disclosure policy.
