The investment world likes to divide investors into two main groups.
First, there are growth investors who purchase fast-growing businesses that can compound over time.
Their main motivation is for share price appreciation that will let them enjoy attractive capital gains.
In the other camp, there are dividend investors whose purpose is to seek out businesses that pay out a regular and consistent dividend.
This steady stream of passive income is the reason they park their money in such stocks.
You can, however, seek to enjoy the best of both worlds.
The key is to look for strong, growing franchises that are doling out increasing dividends.
Not only will you enjoy steady share price appreciation, but you can also see your passive income stream increase over time.
Here are four stocks that can deliver this attractive combination.
Mastercard (NYSE: MA)
Mastercard is a technology giant in the payments space.
The company acts as a secure and convenient conduit connecting customers, banks and merchants when processing digital and online payments.
For 2022, Mastercard’s financials have shown the effects of a recovery in spending across the world as countries open up their borders.
Net revenue rose 17.8% year on year to US$22.2 billion while operating profit jumped 21.6% year on year to US$12.3 billion.
Net profit climbed 14.3% year on year to US$9.9 billion.
Free cash flow also came out stronger by 16.8% year on year at US$10.1 billion.
Mastercard declared a quarterly dividend of US$0.57, bringing its annualised dividend to US$2.28.
The company continues to grow its business with the recent acquisition of Baffin Bay Networks, a cybertechnology company based in Sweden that helps protect customers’ data from online threats.
Starbucks (NASDAQ: SBUX)
Starbucks is a market leader in the coffee industry with more than 36,000 stores worldwide serving speciality coffee, beverages, and food products.
Despite its size, the company is still growing at an impressive clip.
For its fiscal 2023’s first quarter (1Q FY2023), revenue rose 8% year on year to a new record high of US$8.7 billion.
Global comparable store sales improved by 5% year on year, driven by a 7% year on year increase in average transaction prices.
Operating profit rose 6.4% year on year to US$1.25 billion while net profit inched up 4.8% year on year to US$855.2 million.
Starbucks paid out a quarterly dividend of US$0.53 per share, bringing its annualised dividend to US$2.12.
In the US, active Starbucks Rewards membership has hit 30.4 million, up 15% year on year.
A total of 459 new stores were opened in 1Q FY2023, with both the US and China making up 61% of the company’s global portfolio of stores.
With China’s recent reopening, the coffee giant should see its fortunes rise this fiscal year as people resume their normal activities.
McDonald’s Corp (NYSE: MCD)
McDonald’s is one of the largest fast-food chains in the world with over 40,000 locations in more than 100 countries.
Total revenue remained flat year on year for 2022 at US$23.2 billion but operating profit dipped by 10% year on year to US$9.4 billion due to higher operating costs.
Net profit was down 18% year on year to US$6.2 billion.
Despite the weaker results, McDonald’s paid out a quarterly dividend of US$1.52 per share, higher than the US$1.38 paid out a year ago.
The Chicago-based company continued to generate a healthy free cash flow of US$5.5 billion for 2022.
McDonald’s also recently announced a restructuring exercise that will see it laying off hundreds of workers.
Kimberly-Clark (NYSE: KMB)
Kimberly-Clark is a consumer goods giant that sells its products in more than 175 countries and hires more than 45,000 employees worldwide.
Its portfolio of brands includes Huggies (diapers), Kleenex (tissues), and Kotex (sanitary pads).
The company reported a respectable set of earnings for 2022, with revenue inching up 4% year on year to US$20.2 billion.
Operating profit improved 5% year on year to US$2.7 billion while net profit rose 7% year on year to US$1.9 billion.
Kimberly-Clark continued its track record of free cash flow generation, with 2022 and 2021 seeing positive free cash flows of US$1.9 billion and US$1.7 billion, respectively.
The consumer goods giant also declared a quarterly dividend of US$1.16, bringing its annualised dividend to US$4.64.
This year is the 50th consecutive year that Kimberly-Clark has raised its dividend, an impressive feat which qualifies the company as a Dividend King.
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Disclosure: Royston Yang owns shares of Mastercard and Starbucks.