Be sure to check out our detailed stock analysis (click here). In looking for the "double whammy" of investing, which includes finding income and growth stocks, we have found five stocks that fall in this category. Outlined below are five stocks that have managed to grow their dividend payments by at least 20% annually over the last five years, suggesting a strong commitment to throwing off cash to shareholders.
The income part of the five stocks is provided via a dividend yield between 3% and 4.5%. Meanwhile, the growth part will come via earnings growth, where the analysts expect each of the companies to grow EPS by at least 10% annually over the next five years. What's more is that these five stocks all cover five very different industries and can appeal to a range of investors.
Tupperware Brands Corporation (NYSE:TUP) has a 3.1% dividend yield with an expected 5-year EPS growth rate of 12% annually. As well, the company has grown its dividend payment at 23% annually over the last five years.
Tupperware sells storage products across multiple brands via an independent salesforce. Product brands include preparation, storage and serving solutions for the kitchen and home. Europe has been the company's largest segment (60% of revenues) and despite this, and the overall tough economic environment in 2012, Tupperware managed to see total sales come in flat while growing operating profits by 4% in 2012.
The real beauty of Tupperware's growth will be emerging markets (read more about Tupperware in the BRICs). For 2013, the company expects sales growth of 5% to 7%, and EPS growth of 12% to 14% year over year. Moreover, Tupperware recently upped its dividend payment by 72%, while also increasing its share repurchase authorization to $2.0 billion from $1.2 billion, and made plans to repurchase $400 million in stock in 2013, compared to $200 million in 2012. Tupperware also has a return on equity of 50%, but the industry average is half that.
Textainer Group Holdings Limited (NYSE:TGH) pays the highest dividend yield of the five at 4.5% and has grown its dividend payment by an average annual rate of 34% over the last five years. As well, the company is expected to grow EPS by 10% annually over the next five years.
Textainer also happens to be one of five dividend stocks selling for cheap with a PEG ratio of 0.97 (see all five). The company is the world's largest lessor of intermodal containers and primary supplier of leased containers to the U.S. military. Textainer should perform well on the back of a rebounding economy.
S&P forecasts that a 6.5% growth in durable goods orders in 2013, while it sees non-durable goods orders advancing 2.2%. Textainer trades in line at 10 times earnings with its major peers, but it is still below major peer dividend paying TAL International, which trades at 12 times earnings. What's more is that TAL has a 66% payout, compared to Textainer's 45%.
Companhia de Bebidas das Americas (NYSE:ABV) pays one of the highest dividend yields at 3.9% and has grown its dividend payment at the highest rate over the last five years at an average annual rate of 45%. The company is expected to grow EPS at an average annual rate of 11% over the next five years.
Companhia de Bebidas is the largest beverage company in South America, producing beer, soft drinks, sports drinks, iced tea, and bottled water. The company was formed in 2000 through the merger of Brazil's top two beverage firms, Brahma and Antarctica breweries.
Companhia de Bebidas has an impressive reach, which includes a license from Anheuser-Busch InBev to produce and distribute beer brands, Budweiser in Canada and Stella Artois in Brazil, Argentina, Canada, and other countries. The company also has a long-term agreement with PepsiCo to distribute its beverage products in Brazil. Companhia is another solid dividend stock with great exposure to the BRICs (see all five).
DineEquity Inc (NYSE:DIN) pays one of the highest dividend yields of the five stocks listed at 4.2%, while having grown its dividend payments an average annual rate of 24%. The casual dining company is expected to grow 10% at an average annual rate over the next five years.
DineEquity operates the two major chains, Applebee's Neighborhood Grill and IHOP Corp. The company is also billionaire, and founder of Dell Inc., Michael Dell's top stock holding as of 4Q 2012 (see all five). The big tailwind for the company is a rebounding economy. S&P expects the restaurant industry to see single digit same store growth in 2013. Compared to major peers, DineEquity is also on the cheap side of the industry.
Price to earnings
- DineEquity 11x
- Ruby Tuesday n/a
- Denny's 25x
- Bob Evans 22x
Price to operating cash flow
- DineEquity 8x
- Ruby Tuesday 9x
- Denny's 12x
- Bob Evans 9x
The restaurant company also has a robust return on equity of 37% versus the industry average of close to 20%.
Public Storage (NYSE:PSA) has a dividend yield of 3.3% after having grown its dividend payment by an average annual rate of 20%, with the expected FFO growth rate for the next five years to be 6% annually (note this is FFO not EPS).
Public Storage is a specialty real estate investment trust focused on acquiring and managing storage facilities in 38 states in the U.S. and seven European nations. The REIT is the largest owner and operator of storage facilities in the U.S. By leveraging its size, Public Storage will be able to further gain market share. This will be thanks to continued industry consolidation. Public Storage has a low debt burden and a high cash balance, which will allow the company to easily snatch up smaller competitors.
What's great about Public Storage is that its 2012 dividend payout of funds from operations was only 65%. Although the expected FFO growth rate (6%) might seem low compared to the company's expected EPS growth rate (22%), some of the best value lies in this REIT's ability to steadily increase its dividend, which it can do easily based on its FFO payout and that it has shown a history of doing with a 20%+ historical dividend payment growth rate. The storage industry have proven to be a great investment and dividend play irrespective of the broader market (read more about why Public Storage is great).
All five of these stocks offer investors a growing dividend, as well as earnings that are expected to grow nicely, promoting the potential for price appreciation.