Key Points
- Dividend stocks deliver compounding income and have beaten non-payers historically.
- Hartford FundsshowsS&P 500dividend payers generating positive returns every decade since the 1930s.
- Recent hikes of 15% and 33%, respectively, from two dividend growth stocks signal buy-and-hold opportunities.
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Investors seeking to grow wealth over the long term should prioritize dividend stocks for their reliable income stream and compounding potential. These stocks provide regular cash payments that can be reinvested to buy more shares, accelerating portfolio growth without relying solely on price appreciation.
Historically, dividend payers have outperformed non-payers. According toHartford Fundsdata from 1930 through 2024, dividend-paying stocks in theS&P 500have delivered positive returns in every decade since the 1930s, even during turbulent periods like the 2000s when the broader index posted negative total returns.
This track record underscores their resilience and ability to cushion downturns while contributing significantly to total returns — dividends alone accounted for 34% of the S&P 500’s average annual return from 1940 to 2024.
In today’s uncertain markets, this stability makes dividend stocks a cornerstone for buy-and-hold strategies. Two standout examples just announced hikes of 15% and 33%, respectively, signaling strong confidence in future cash flows and deserve a closer look for potential addition to your portfolio.
Intuit (INTU)
Intuit(NASDAQ:INTU) stands out as a dividend powerhouse in the financial software space, offering essential tools for small businesses and individuals through products like TurboTax, QuickBooks, and Mailchimp. For long-term buy-and-hold investors, INTU provides a blend of steady income, robust growth, and a competitive moat built on recurring revenue from subscriptions and cloud-based services.
With the shift to digital finance accelerating, INTU benefits from high customer retention — over 90% for QuickBooks — and expanding markets like payroll and Credit Karma integration. This positions it to generate consistent free cash flow, supporting ongoing dividend increases while funding innovation in AI-driven accounting.
Loading stock data...INTU’s dividend history reflects disciplined capital allocation. The company initiated payouts in 2011 and has now raised them annually for 14 straight years. Over the past decade, its dividend CAGR clocks in at 15%, turning a modest starting yield into a meaningful income source today. The five-year CAGR of 14% further highlights recent acceleration amid post-pandemic recovery and product expansions.
At a current yield around 0.6%, the free cash flow payout ratio sits comfortably at 22%, leaving ample room for growth without straining earnings. For dividend investors, INTU offers low volatility compared to tech peers. Adding it to a portfolio diversifies into fintech, where demand for automated tax and bookkeeping solutions shows no signs of slowing, ensuring reliable hikes ahead.
Royal Caribbean (RCL)
Royal Caribbean Group(NYSE:RCL) has transformed from pandemic survivor to dividend dynamo, making it a compelling pick for patient buy-and-hold investors chasing leisure sector exposure. As a leader in experiential travel, RCL operates a fleet of innovative ships across brands like Royal Caribbean and Celebrity, tapping into pent-up wanderlust with record bookings and onboard spending.
The cruise ship’s operator long-term appeal lies in its pricing power — yields are up 10% year-over-year — and operational efficiencies like LNG-powered vessels that cut costs and appeal to eco-conscious consumers. With global cruise penetration still under 3%, RCL has runway for fleet growth and market share gains, driving earnings recovery toward pre-COVID peaks.
Loading stock data...RCL’s dividend journey is one of bold restarts. After suspending payouts in 2020 to preserve liquidity, it resumed in July 2024 at $0.40 per share quarterly and has rapidly been increasing it ever since. It raised it to $0.55 per share last December, to $0.75 in February, and just hiked it again this month to $1.00 per share — a 33% increase.
This aggressive trajectory yields an 11.5% 10-year CAGR, factoring in the hiatus, while the five-year CAGR explodes to 38.7%, underscoring rapid rebuilding. The current yield hovers near 1%, backed by a FCF payout ratio of 5% on surging profits — earnings per share jumped 74% in 2024.
For dividend portfolios, RCL adds cyclical upside with a safety net from $735 million in cash reserves. though the company maintains a high debt leverage. As travel rebounds, its commitment to shareholders positions it for sustained growth.
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