If you're investing in stocks that have long track records for increasing their payouts, odds are, you're buying shares of them because of their stability and the potential for dividend income. But just because a stock is an excellent dividend investment doesn't mean it can't also be a top growth stock to own. Stocks that can balance both dividends and growth can give investors the best of both worlds.
AbbVie (NYSE: ABBV) and Walmart (NYSE: WMT) are two Dividend Kings that also would have doubled your money in just the past five years. Here's why these stocks are doing so well and why they can be excellent options to hang on to for the long haul.
AbbVie
Pharmaceutical company AbbVie spun off from Abbott Laboratories back in 2013. And if you include its time when it was part of the broader healthcare company, its dividend growth streak goes back more than 50 years, which is why it's considered a Dividend King despite its seemingly short history.
By spinning off, AbbVie has been able to focus specifically on drug development, and those opportunities can be highly lucrative, as is evident with the stock's impressive gains. During the past five years, the growth-focused AbbVie has produced returns of nearly 150% for its shareholders. The more conservative Abbott Laboratories has seen its value rise by a little more than 40% during the same time frame.
Today, AbbVie still pays a fairly high dividend (it yields 3.3%) and it's also generating some solid growth along the way. In its most recent quarterly earnings report, for the period ended Sept. 30, the company reported net sales of $14.5 billion, a 5% gain when factoring out foreign exchange.
AbbVie remains focused on growth, particularly as Humira, which for years has been its top-selling drug, has begun to lose patent protection. The company has been pursuing acquisitions in recent years to bolster its growth prospects, including a mammoth $63 billion acquisition of Botox maker Allergan in 2020. More recently, it spent $10 billion to purchase cancer company ImmunoGen and $8.7 billion to add neuroscience drugmaker Cerevel Therapeutics.
With growth still a big priority for AbbVie, the stock could continue to be a good buy for the foreseeable future.
Walmart
Big-box retailer Walmart is another great example of a stable-but-growing business to invest in. Whether you love it or hate it, there's no question Walmart is a staple and go-to store for many consumers across the country.
In five years, Walmart's stock has generated returns of about 110%. Its yield is a bit modest at just over 1% and it's lower than the S&P 500 average of 1.3%. But since 1974 when it first started paying a dividend, Walmart has proven to be a rock-solid option for income investors.
During the trailing 12 months, the company has generated $665 billion in sales with profit of $15.6 billion. And Walmart is still eyeing more growth opportunities as it plans to open more stores and if its acquisition of TV maker Vizio goes through, that can be a potential catalyst for its advertising business. It has also expanded its online delivery over the years and its Walmart+ subscription represents yet another growth opportunity for the business.
While Walmart may appear to be a good, safe stock to buy with reliable dividend income, it also makes for a solid growth investment to hang on to for years.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Walmart. The Motley Fool has a disclosure policy.
