Growth investors look for capital gains when the share prices of their stocks rise.
Income investors, on the other hand, look forward to a stream of passive income from the dividends received from their stocks.
You can, however, enjoy the best of both worlds if you look for companies with growing profits that are also increasing their dividends along the way.
We feature four US growth stocks with higher profits that have also increased their dividends.
Tractor Supply Company (NASDAQ: TSCO)
Tractor Supply Company is the largest rural lifestyle retailer in the US with 2,216 Tractor Supply stores in 49 states as of 30 December 2023.
The business reported healthy top and bottom-line growth for 2023 as it opened more stores around the US.
Revenue for 2023 increased by 2.5% year on year to US$14.6 billion with flat comparable store sales.
Operating profit improved by 3.1% year on year to US$1.5 billion while net profit inched up 1.7% year on year to US$1.1 billion.
The rural retailer also generated a positive free cash flow of US$580.2 million, in line with the US$583.6 million generated in the prior year.
Dividend per share increased by 12% year on year from US$3.68 to US$4.12.
During 2023, Tractor Supply opened a net 69 Tractor Supply stores and 12 new Petsense stores.
It also rebranded 81 Orscheln Farm and Home stores acquired in 2022 to Tractor Supply stores.
The company repurchased around 2.7 million shares for approximately US$597 million and offered a positive outlook.
Sales for 2024 will be in the range of US$14.7 billion to US$15.1 billion and the company plans to open around 80 new Tractor Supply stores while completing its tenth distribution centre.
Kimberly-Clark (NYSE: KMB)
Kimberly-Clark is a consumer goods company selling its family, feminine and baby care products to around 175 countries around the world.
Its portfolio of brands includes famous ones such as Huggies, Kleenex, Scott, and Kotex.
Kimberly-Clark’s 2023 sales inched up 1% year on year to US$20.4 billion.
With its cost of sales falling by 4% year on year, gross profit improved by 13% year on year to US$7 billion.
The consumer goods company’s operating and net profit, however, fell by 13% and 9% year on year, respectively, because of a US$658 million impairment of intangible assets.
Excluding this, operating and net profit would have risen by 12% and 25.2% year on year, respectively, to US$3 billion and US$2.4 billion.
Kimberly-Clark’s 2023 free cash flow came in at US$2.8 billion, nearly 50% higher than the US$1.9 billion churned out a year ago.
The company increased its quarterly dividend to US$1.22 per share, up 3.4% year on year.
This increase represents the 52nd consecutive year that Kimberly-Clark has paid higher dividends.
PepsiCo (NASDAQ: PEP)
PepsiCo is a food and beverage (F&B) company that manufactures and distributes beverages and snack foods to more than 200 countries around the world.
The business owns a portfolio of famous brands such as Pepsi-Cola, Mountain Dew, Gatorade, Quaker, and Doritos.
2023 saw a strong performance from the F&B company.
Revenue rose 5.9% year on year to US$91.5 billion while operating profit improved by 4.1% year on year to US$12 billion.
Net profit edged up 1.8% year on year to US$9.1 billion.
Pepsi-Co generated a positive free cash flow of US$7.9 billion for 2023, 41% higher than the US$5.6 billion churned out in the previous year.
In line with the strong free cash flow generation, the company announced a 7% year on year increase in its quarterly dividend to US$5.42 per share.
Like Kimberly-Clark, this is Pepsi-Co’s 52nd consecutive dividend increase.
Lancaster Colony (NASDAQ: LANC)
Lancaster Colony is a manufacturer and marketer of speciality food products for the retail and food service channels.
The company released a strong set of earnings for the first half of fiscal 2024 (1H FY2024) ending 31 December 2023.
Revenue rose 5% year on year to US$947.5 million with operating profit climbing 21.8% year on year to US$122.5 million.
Net profit for 1H FY2024 jumped 23% year on year to US$95.4 million.
The business generated a positive free cash flow of US$104.4 million for the half year, 24.3% higher than the US$84 million generated in 1H FY2023.
The dividend per share for 1H FY2024 amounted to US$1.75, 6.1% higher than the prior year’s US$1.65.
Just last week, Lancaster Colony’s board of directors recommended a quarterly dividend of US$0.90 per share, representing the company’s 61st consecutive dividend increase.
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Disclosure: Royston Yang owns shares of Tractor Supply Company.
