Investors favor dividend growth in stable and profitable companies, with potential undervaluation.

From Nasdaq: 2024-10-06 07:00:00

Investors value dividend growth in companies as a sign of stability and profitability, providing an increasing passive income stream. The ProShares S&P 500 Dividend Aristocrats ETF (BATS: NOBL) tracks S&P constituents with a history of consistent dividend increases for at least 25 years.

Cigna Group (NYSE: CI) boasts a sky-high annualized 3-year dividend growth rate of nearly 400% with a sustainable payout ratio of under 46%. Analysts believe CI shares are undervalued, offering 16% upside potential. CDW Corp. (NASDAQ: CDW) saw a significant increase in quarterly dividend payments, reflecting strong earnings history and growth potential.

Coterra Energy Inc. (NYSE: CTRA) has grown its dividend by 26% annually over the past three years, offering an annualized dividend of $0.84 with a competitive yield of 3.39%. The company’s aggressive share buyback program and operational metrics support the view that its shares are undervalued.

When considering dividend stocks, investors should also evaluate factors beyond dividend growth, such as dividend yield and payout ratio. A higher dividend yield can be enticing but may indicate lack of reinvestment for business expansion. Payout ratio reveals how much of a company’s income goes towards dividends, which is vital for sustainability.



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