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Prediction: These 5 Dividend-Paying Growth Stocks Will Boost Their Payouts By 10% or More In 2025, Even if There's a Stock Market Sell-Off
2024 was a phenomenal year for most mega-cap growth stocks, which helped lead broader indexes like the S&P 500(SNPINDEX: ^GSPC) to new heights. Still, some investors may be concerned that the rally is a bit overextended.
Even weak companies can see their stock prices rise when investors are optimistic. However, over time, the best-performing stocks are businesses that deliver on investor expectations and continue to innovate. So, with the S&P 500 around an all-time high, ensuring you are investing in quality companies is imperative.
Investing in dividend stocks is a way to collect passive income no matter what equity prices are doing. Here's why Broadcom(NASDAQ: AVGO), Visa(NYSE: V), Salesforce(NYSE: CRM), Meta Platforms (NASDAQ: META), and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) are well positioned as industry-leading companies that can afford to raise their dividends through economic cycles and periods of volatility.
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Two top-tier dividend-paying growth stocks
In their most recent quarterly earnings results, Broadcom and Visa announced significant increases to their dividends for 2025. Broadcom hiked its payout by 11%, and Visa boosted its dividend by 13%. I would expect both companies to announce hikes of 10% or more again toward the end of this year.
Broadcom and Visa are textbook examples of dividend-paying growth stocks. Both companies have impeccable business models -- Broadcom has network connectivity and artificial intelligence (AI) and Visa has a global payment processing network for debit and credit cards.
Since Broadcom and Visa are growing their sales and operating income at impressive rates, they can afford to pass along a portion of profits to investors through dividends. Over the last five years, Broadcom has increased its dividend by 81.5%, and Visa has nearly doubled its payout. However, the dividend payment isn't so large that it soaks up too much excess capital.
Long-term investors would prefer Broadcom rapidly expand its AI product lineup rather than divert precious capital toward a bloated dividend. Visa reinvests in its business, too, but it spends the bulk of its capital return program on buybacks rather than dividends. Visa's relentless buybacks have reduced the company's share count by 11% in the last five years, helping the company grow earnings per share faster than net income to help keep its valuation reasonable.
Broadcom yields just 1.2%, and Visa yields 0.8%. The low yields are due to substantial gains in both stocks, not a lack of commitment to boosting payouts.
Newer dividend-paying growth companies
Meta Platforms, Salesforce, and Alphabet all began paying dividends in 2024.
Meta initiated its dividend on Feb. 1, when it reported its fourth-quarter and full-year 2023 results.
Salesforce announced its dividend on Feb. 28, when it reported fourth-quarter and full-year fiscal 2024 results.
Alphabet announced its first dividend when it reported first-quarter 2024 results on April 25.
I would expect all four companies to make regularly scheduled dividend raises once per year around the same time as their initial announcements (fourth-quarter earnings for Meta and Salesforce and first-quarter earnings for Alphabet).
All three stocks have yields of 0.5% or less at the time of this writing, but I would expect all three companies to make annual double-digit percentage raises for years to come and transform into dividend-growth stocks like Broadcom and Visa.
All three companies are highly profitable and generate tons of free cash flow (FCF) despite ramping spending on AI. FCF yield is a useful way of determining a company's theoretical payout if it passed along all of its FCF to investors through dividends.
Similar to dividend yield, FCF yield is just FCF per share divided by the share price, or total FCF divided by market cap. Like dividend yield, FCF yield goes down as a stock price goes up. Salesforce, Meta, and Alphabet beat the S&P 500 in 2024, which brought down their FCF yields. However, despite the big year and record research and development expenses, all three companies still have solid FCF yields.
Each company can afford to substantially raise its payout and support it with cash without slowing down spending on long-term growth.
Five balanced buys for 2025
Broadcom, Visa, Salesforce, Meta, and Alphabet may not light up an income investor's radar. However, don't be surprised if all five companies grow their payouts at impressive rates for years to come.
For now, each company's dividend is merely the cherry on top of an already solid underlying investment thesis.
Investors looking to supplement income in retirement would do better with higher-yielding stocks with multidecade track records of increasing payouts. But investors who are more focused on total returns (capital gains plus dividends) than dividends alone should focus on a company's ability to grow earnings and, in turn, its dividend over time instead of what the yield is today.
Broadcom, Visa, Salesforce, Meta, and Alphabet have runways for future earnings growth, making them dividend-growth stocks worth considering in 2025.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, Microsoft, Salesforce, and Visa. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
