If you’re in the market to invest and have about $5,000 to spare, focusing on dividend stocks can be a smart strategy. Unlike growth stocks, which can be subject to volatility, dividend stocks offer a reliable way to earn passive income, providing you with quarterly checks that can bolster your earnings. This steady income source allows you to relax and watch your wealth grow over time.
When selecting dividend stocks, it’s crucial to look for companies with strong branding, a solid competitive position, and a proven ability to generate substantial free cash flow. Companies that meet these criteria can increase their dividend payouts over time, allowing you to build a portfolio that not only boosts your income but helps safeguard against inflation.
Here are three appealing dividend stocks worth considering to put that $5,000 to work.
First on the list is Mondelez International. As a leading global snack food company, Mondelez reported sales of $36 billion in 2023 and operates in over 150 countries. Known for iconic brands like Oreo, Cadbury, and Ritz, Mondelez has shown steady growth in both revenue and net profit. From 2021 to 2023, its net revenue increased from $28.7 billion to $36 billion, showcasing the company’s robust performance. Importantly, Mondelez has generated an average annual positive free cash flow of $3.3 billion, allowing it to consistently increase dividends for over two decades. The latest quarterly dividend came in at $0.47 per share, reflecting a 10.6% year-over-year growth. With its innovative approach to snacking and strategic partnerships, Mondelez is well-positioned for future growth, making it a strong candidate for dividend investment.
Next up is Visa, the payments powerhouse. With over 4.5 billion credit and debit cards in circulation, Visa has seen its revenue soar from $24.1 billion in 2021 to $32.7 billion in 2023. This growth trend has been paralleled by an increase in net income, which jumped from $12.3 billion to $17.3 billion. Visa’s ability to generate free cash flow is impressive, having risen from $14.5 billion to $19.7 billion. This financial strength has enabled the company to consistently raise its dividend every year since it became public in 2008, expanding from a modest $0.0263 to $0.52 per share—a nearly 20-fold increase. Recent collaborations, like those with Amazon and HSBC, show that Visa is not resting on its laurels; it’s actively seeking innovative ways to enhance customer experiences and expand its global presence, ensuring continued profitability and increasing dividend payouts.
Lastly, we have Starbucks, the coffee giant renowned for its global presence of over 38,000 stores. Starbucks has successfully increased its revenue from $29.1 billion in 2021 to $36 billion in 2023. Although its net income has plateaued at around $4.1 billion, the company has shown resilience by consistently generating free cash flow, averaging $3.6 billion over three years. Starbucks has raised its quarterly dividend every year for 13 years, most recently from $0.05 to $0.57 per share. With recent leadership changes and strategic initiatives aimed at improving customer experience, Starbucks is in a prime position to rebuild and elevate its growth trajectory, assuring investors of continued dividend increases.
Investing in dividend stocks like Mondelez, Visa, and Starbucks can diversify your portfolio while ensuring you receive regular income. These companies not only have strong fundamentals but are also taking proactive steps to innovate and grow within their markets. By considering these stocks, you’re setting yourself up for a potential increase in wealth through rising dividends and capital appreciation. Engaging with dividend stocks combines the potential for growth while providing the peace of mind associated with regular income.