Dividend stocks are an attractive option for many investors. In addition to capital appreciation, as these businesses grow and gain in value, they share their profits with shareholders via quarterly or sometimes monthly dividends. This can be especially attractive for those in or near retirement looking for additional income sources.
Let's look at three dividend stocks that have reliable and growing dividends but are still growing and increasing value for shareholders. Based on their track records and prospects, these stocks are worth doubling up on right now.
Starbucks
If asked to name a ubiquitous coffee chain, it's likely the answer would be Starbucks(NASDAQ: SBUX). It's difficult to travel anywhere in the United States and not see one or more Starbucks locations, often with long lines of customers waiting to buy a variety of hot and cold coffee drinks.
Starbucks currently has a dividend yield of 2.8%, close to the highest it's been in three years. This is due, in part, to the fact that the stock is trading 37% below its mid-2021 high.
However, today's yield is also a result of Starbucks raising its dividend every year that it has been a public company. Over the past three years alone, it has increased its dividend by 27%.
Starbucks had a rough second quarter of 2024 (ending in March). Results missed the market's expectations and the stock sold off sharply. That said, all companies go through rough patches, and they can sometimes be buying opportunities for investors.
Kinsale Capital
Whereas Starbucks is a household name, Kinsale Capital(NYSE: KNSL) is a company many have never heard of. Kinsale is an insurance company in a specific industry niche called excess and surplus. The company's specialty is insuring things that are less common and more difficult to underwrite, like a skydiving company or axe-throwing business.
Kinsale has been very successful in this small corner of the insurance market. Over the past five years, its total return has been 354%, compared to the S&P 500's 101%. In addition to this market-beating stock's performance, Kinsale pays a dividend that currently yields 0.15%. That's not much to write home about, but considering the stock's performance, it's a nice bonus for investors.
Despite its long-term performance, Kinsale stock is currently down 28% over the past few months, presenting a rare discount for investors. Some of this sell-off was due to the most recent earnings results when growth slowed slightly. However, there isn't much reason for concern. Kinsale still grew its revenue by 45% and its earnings per share (EPS) by 77% in the quarter.
Ryman Hospitality Group
For investors looking for a stock with growth potential, a high dividend yield, and exposure to the real estate market, Ryman Hospitality Group(NYSE: RHP) could be a good opportunity. The company owns the popular Gaylord hotel chain, which are large hotels that cater to conferences and business meetings. It also owns entertainment properties in the Nashville area. Ryman is a real estate investment trust (REIT), which means it has to pay at least 90% of its taxable income to shareholders as a dividend.
Ryman had a rough go of it during the pandemic when travel came to a halt. This was particularly difficult for the company because so much of its business comes from large gatherings of people at conferences. As time has gone on, however, the REIT has recovered nicely from the pandemic shutdowns.
In Q1 of 2024, Ryman's most recently reported quarter, things looked a lot worse than they were. Almost all reported metrics were down year over year, but that was more due to a very tough comparable period in 2023 than it was the business performance.
It makes sense to view Ryman's performance on a much longer timeline considering the impact of the pandemic and the company's impressive post-pandemic recovery. Over the long term, Ryman's growth has been impressive.
RHP Revenue (Quarterly) data by YCharts.
Ryman has a compelling dividend yield, currently at 4.2%. The company is continually investing in its hotel properties while also building out its entertainment portfolio. The stock has cooled off by about 18% from its early 2024 high, making shares a compelling buy at today's price.
Should you invest $1,000 in Starbucks right now?
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Jeff Santoro has positions in Kinsale Capital Group, Ryman Hospitality Properties, and Starbucks. The Motley Fool has positions in and recommends Kinsale Capital Group and Starbucks. The Motley Fool recommends Ryman Hospitality Properties. The Motley Fool has a disclosure policy.
