For Immediate Release
Chicago, IL – August 29, 2024 – Today's Zacks Investment Ideas feature highlights Cardinal Health CAH, Taiwan Semiconductor Manufacturing TSM and Altria MO.
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3 Stable Dividend Growth Stocks to Buy for Passive Income: TSM, MO, CAH
Everyone loves dividends because they provide a passive income stream, limit drawdowns on other positions, and give you multiple ways to profit from your investments.
And when considering dividend-paying stocks, our first choice of consideration should be stocks with a track record of growing dividends, reflecting a commitment to further increasing returns for shareholders.
Additionally, consistent dividend hikes reflect the company's successful attitude of choosing to share profits with shareholders.
For those looking for companies with a history of consistently growing dividends over the long term, Cardinal Health, Taiwan Semiconductor Manufacturing, and Altria fit the bill. Let's take a closer look at each one.
Cardinal Health Posts Strong Growth
Cardinal Health is a nationwide distributor and servicer of pharmaceutical products to pharmacies, healthcare providers and manufacturers. The company recently reported strong quarterly results, with sales up 12% and EPS up 29%, and also raised its outlook for the current fiscal year.
The company's sales growth has been consistent since its founding.
Its strong cash generation capabilities give it the flexibility to continue to benefit shareholders and maintain its place in the elite Dividend Aristocrats club. As a quick recap, Dividend Aristocrats are S&P 500 companies that have increased their quarterly dividends for at least 25 consecutive years.
Surprisingly, CAH posted record operating cash flow and free cash flow throughout the most recent period.
TSM Stocks Benefit from AI Trading
Taiwan Semiconductor, currently carrying a Zacks Rank #2 (Buy), has seen its earnings outlook shift to bullish across the board following a strong quarterly report reflecting robust demand. In the latest headline figures, TSM saw revenue increase 33% and EPS grow 30%, continuing its recent growth trajectory.
The company has long been a favorite among income-focused investors looking for exposure to semiconductors, with dividend growth of 5.5% annualized over the past five years, and its shares are up more than 60% this year, benefiting from an AI-driven semiconductor industry as a whole.
While the stock is on a strong 2024 track, investors aren't overpaying for the company's projected growth, with the current PEG ratio of 0.8x representing a significant discount to the five-year median of 1.3x and the five-year high of 3.4x.
The story continues
Artoria undergoes transformation
Like CAH, Altria has long been a favorite among income-oriented investors and has maintained its Dividend Aristocrat status through years of consistently high dividends. The tobacco giant has undergone a major transformation in recent years due to growing health concerns and is now expanding into the smokeless tobacco sector.
The stock has had a big 2024, rising 37% compared to the S&P 500's 19% gain.
And for those looking for a high yield, Altria stock is living up to that expectation with a current annualized yield of 7.4%. The company has raised its dividend six times in the past five years, and its efforts to return more and more profits to shareholders have led to a five-year annualized dividend growth rate of 4%.
The company paid dividends of $1.7 billion and $3.4 billion in the second quarter and first half of 2024, respectively.
Conclusion
Dividends are like a paycheck for investors, and everyone loves them. Dividends help limit drawdowns on other positions and provide a passive source of income, two important features that all market participants enjoy.
For those looking for a company with a history of stable dividend payments, all three of the above companies fit the criteria.
All three companies recently increased their quarterly dividends and continue to prioritize shareholders.
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Past performance is not a guarantee of future results. Any investment involves the possibility of loss. This material is for informational purposes only and does not constitute investment, legal, accounting or tax advice or a recommendation to buy, sell or hold any securities. No recommendation or advice is provided as to whether an investment is appropriate for any particular investor. Do not assume that investments in the securities, companies, sectors or markets identified and discussed have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed do not necessarily reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities with respect to any securities. These returns are derived from a hypothetical portfolio comprised of stocks with a Zacks Rank = 1 and are rebalanced monthly with no transaction costs. These are not the returns of an actual portfolio of stocks. The S&P 500 is an unmanaged index. For more information about the performance figures displayed in this press release, please visit https://www.zacks.com/performance.
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Altria Group (MO): Free Stock Analysis Report
Cardinal Health (CAH) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company (TSM): Free Stock Analysis Report
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