3 Dividend Blue Chips For Growth And Yield

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While periods of market declines are painful to endure, they also offer the chance to buy great businesses at reduced prices. For dividend stocks, this benefit is two-fold, as investors not only get lower earnings valuations, but receive higher dividend yields as well.

One way to do that is to start with the Dividend Contenders, a group of stocks with at least a decade of consecutive dividend increases. These 3 Dividend Contenders pay dividends to shareholders, and have increased their dividends for over 10 years.


Nike (NKE)

Nike is the world’s largest athletic footwear, apparel, and equipment maker, with a market cap of $165 billion. The namesake is one of the most valuable brands in the world. Nike’s offerings focus on six categories: running, basketball, the Jordan brand, football (soccer), training, and sportswear. Nike also owns Converse.

In late December, Nike released (12/21/23) financial results for the second quarter of fiscal year 2024 (Nike’s fiscal year ends on May 31st). Revenue rose 1% over the prior year’s quarter. Direct sales grew 6% and comprised 43% of total sales while digital sales grew 4%. Gross margin expanded from 42.9% to 44.6% thanks to price hikes and lower freight costs and earnings-per-share grew 21%, from $0.85 to $1.03, exceeding the analysts’ consensus by $0.18.

Sustained margin improvement may prove hard in the future, but there is still ample room for revenue gains and share buybacks. China is likely to be the backbone of Nike’s growth story, as it posted gains even in 2020, despite the extremely adverse business environment. Moreover, the relatively recent direct-to-consumer push of Nike is likely to prove a significant growth driver thanks to the shift of consumers towards online shopping.

NKE has increased its dividend for 22 years and the stock yields 1.4%.


Starbucks (SBUX)

Starbucks is a giant coffee retailer that now has more than 37,000 stores worldwide. Nearly half of the stores are in the U.S. and nearly 20% of the stores are in China. The company operates under the namesake Starbucks brand, but also holds the Teavana, Evolution Fresh, and Ethos Water brands in its portfolio. The $106 billion market cap company generated $36 billion in annual revenue in fiscal 2023.

In late January, Starbucks reported (1/30/24) financial results for the first quarter of fiscal year 2024 (Starbucks fiscal year ends the Sunday closest to September 30th). The company maintained its strong business momentum and grew its comparable store sales more than 5% thanks to 5% growth in North America and 7% growth in international markets. Same-store sales in China grew 10%.

Adjusted earnings-per-share grew 20%, from $0.75 in the prior year’s quarter to $0.90, but missed the analysts’ consensus by $0.04. The headwinds from the lockdowns in China and high inflation have subsided.

Starbucks lowered its guidance for growth of sales in fiscal 2024 from 10%-12% to 7%-10% but it reaffirmed its guidance for 15%-20% growth of earnings-per-share, in line with its long-term guidance of 15%-20% growth of the bottom line. Accordingly, we expect earnings-per-share of at least $4.15 this year.

Starbucks has increased its dividend for 13 years and currently yields 2.3%.


Comcast Corporation (CMCSA)

Comcast is a media, entertainment and communications company. Its business units include Cable Communications (High-Speed Internet, Video, Business Services, Voice, Advertising, Wireless), NBCUniversal (Cable Networks, Theme Parks, Broadcast TV, Filmed Entertainment), and Sky, a leading entertainment company in Europe that provides Video, High-speed internet, Voice, and Wireless Phone Services directly to consumers.

Comcast reported its Q4 2023 results on 01/25/24. For the quarter, the company’s revenues climbed 2.3% to $31.3 billion, adjusted EBITDA (a cash flow proxy) was essentially flat, rising 0.1% to $8.0 billion, adjusted earnings-per-share climbed 2.4% to $0.84. And it generated free cash flow of $1.7 billion.

The Connectivity & Platforms segment’s revenues rose by 0.5% to $20.4 billion and adjusted EBITDA growth was 3.1% to $7.6 billion with the help of adjusted EBITDA margin expansion of 1.3% to 37.1%.

CMCSA has increased its dividend for 16 years and the stock currently yields 2.9%. Its dividend is well-covered by earnings and cash flows. Comcast is one of the largest players in the entertainment industry.


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Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

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