3 Growth Stocks In A Dividend Portfolio

Even in a dividend portfolio, you can have businesses with solid growth potential. Here are 3 companies that I'm holding that could 2X their dividend in five years with their share price following suit.


Apple (AAPL)

Dividend Yield: 1.48%
Payout Ratio: 25.4%
5-year Dividend Growth: 10.84%

Apple's dividend yield is a paltry 1.48% (compared to my portfolio's 5% yield); however, at a payout ratio of only 25%, the dividend could easily double in the next three to five years. Even if earnings stay constant from here, that would only bump the payout ratio to 50%, which is still a healthy and safe amount.

But it's unlikely that Apple sees no growth in its earnings. We're talking about the most recognizable brand in the world. And while iPhone sales are in a bit of a slump lately, the Services segment is starting to hit its stride.

When the second quarter fiscal results were reported, Apple showed record Services revenue, increasing by 16% year over year. Aiding the segment were the double-digit revenue growths across the App Store, Apple Music, Apple Care, Apple Pay, and cloud services.

The subscription model, which seems to be the craze for many businesses and consumers nowadays, is also heating up for Apple. From 270 million just 12 months ago, Apple reported 390 million paid subscribers at the end of the quarter, a 44% increase. Additionally, Apple Pay transactions doubled from the same quarter last year.

All this while announcing another addition to the Services business in the form of Apple TV Plus, with plans to air original TV shows and movies, a la Netflix (NFLX). The headliners for said streaming service are some of Hollywood's biggest stars: Steven Spielberg, J.J. Abrams, Oprah Winfrey, etc.

Needless to say, Apple has the means for huge dividend growth in the coming years (provided there's no economic recession). Their intention, however, is less known. The company has preferred buybacks more so than increasing its dividend payouts. Nevertheless, good earnings growth will be reflected in the share price as well, so the tradeoff with the dividend will be higher capital appreciation and equally awesome investment returns.

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