Adding growth stocks to your portfolio is a great way to enjoy long-term compounding.
As these businesses steadily grow their profits and cash flows, you can enjoy sweet capital gains as their share prices rise in tandem.
That said, some growth stocks also pay out dividends, thereby giving investors the best of both worlds.
And as profits increase over the years, these dividends should also rise.
Here are five attractive US growth stocks that not only enjoyed increased profits but also upped their dividends.
ResMed Inc (NYSE: RMD)
ResMed is a medical device and digital health technology company that deals with sleep apnea, COPD (chronic obstructive pulmonary disease), and other chronic diseases.
The company’s devices and software help to reduce the impact of chronic diseases on patients and healthcare systems in more than 140 countries.
Revenue for the first nine months of fiscal 2024 (9M FY2024) ending 31 March 2024 rose 12% year on year to US$3.5 billion.
The higher sales were driven by increased demand for ResMed’s sleep devices and strong growth across its mask product portfolio.
Operating profit increased by 10% year on year to US$938.7 million while net profit improved by 9% year on year to US$728.7 million.
ResMed generated a positive free cash flow of US$886.6 million for 9M FY2024, more than double the US$370.6 million churned out a year ago.
A quarterly dividend of US$0.48 was paid earlier in June, 9.1% higher than the US$0.44 paid out a year ago.
Management believes that there is a large addressable market for the company’s solutions as around one billion people are suffering from sleep apnea.
In total, around 2.5 billion people are living with sleep apnea, COPD, asthma, and insomnia.
Costco Wholesale (NASDAQ: COST)
Costco is a global retailer that runs a membership warehouse club in eight countries and provides e-commerce services in the US, Canada, the UK, South Korea, Mexico, Taiwan, Japan, and Australia.
The company currently operates 878 warehouses and provides a wide selection of merchandise for its members.
For 9M FY2024 ending 12 May 2024, Costco saw total revenue increase by 7% year on year to US$174.5 billion.
Operating profit jumped 17.1% year on year to US$6.2 billion with net profit growing by 21.3% year on year to US$5 billion.
The retailer generated a positive free cash flow of US$5.2 billion, 14.7% higher than the US$4.6 billion generated in 9M FY2023.
Comparable store sales improved by 5.3% for 9M FY2024 while its e-commerce division saw a nearly 15% year on year increase in comparable store sales for the same period.
Costco increased its quarterly dividend by 13.7% year on year to US$1.16 per share.
As of 12 May, Costco had 74.5 million paid memberships, a 7.8% year on year increase, with a very high worldwide membership renewal rate of 90.5%.
Ecolab Inc (NYSE: ECL)
Ecolab provides water, hygiene, and infection prevention solutions and services, employs more than 48,000 staff, and has operations in more than 170 countries.
The company saw sales for the first quarter of 2024 (1Q 2024) rise 5% year on year to US$3.75 billion.
Operating income surged by 47% year on year to US$517.9 million while net profit climbed 77% year on year to US$412.1 million.
Free cash flow saw a sharp increase for the quarter, soaring from just US$24.5 million to US$447.9 million.
A quarterly dividend of US$0.57 was paid, a slight increase from US$0.53 a year ago.
Ecolab has agreed to sell its global surgical solutions business to Medline for US$950 million in cash and has increased its full-year outlook.
Management expects a 12% to 15% annual earnings growth for 2025 and beyond.
Walmart (NYSE: WMT)
Walmart is a global retailer with more than 10,500 around the globe serving 255 million customers and members.
For the first quarter of fiscal 2024 (1Q FY2024) ending 30 April 2024, Walmart’s revenue rose 6% year on year to US$161.5 billion.
Operating profit increased by 9.6% year on year to US$6.8 billion with net profit more than tripling year on year to US$5.1 billion.
The retailer’s dividend per share increased by 9.2% year on year from US$0.76 to US$0.83.
Walmart provided encouraging guidance for its 2Q FY2024, with sales expected to rise between 3.5% to 4.5% year on year and operating income to increase by between 3% to 4.5% year on year.
Yum! Brands (NYSE: YUM)
Yum! Brands operates and franchises more than 59,000 restaurants in over 155 countries under the brands KFC, Taco Bell, Pizza Hut, and Habit Burger Grill.
The company reported a mixed set of results for 1Q 2024 with revenue dipping by 3% year on year to US$1.6 billion.
Operating profit slid 1% year on year to US$520 million but net profit eked out a 5% year on year increase to US$314 million.
Yum! Generated a positive free cash flow of US$314 million for the quarter.
1Q 2024 saw the opening of more than 800 new restaurants with a 6% year-on-year store growth, putting the food and beverage operator in a good position to surpass 60,000 restaurants by the end of 2024.
The company’s quarterly dividend rose 10.7% year on year to US$0.67.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
