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3 Dividend-Paying Growth Stocks to Buy and Hold for the Long Term

Dividend-paying growth stocks haven’t garnered much attention in recent months. You can blame the general macroeconomic environment for this.

Rising inflation and a hawkish Fed are not a recipe for success. However, the situation also allows the savvy investor to acquire dividend-paying growth stocks at a discount.

And why not? One of the best ways to plan for volatility is to load your portfolio with dividend-paying growth stocks.

Famous investor John D. Rockefeller once said, “The only thing that makes me happy is seeing my dividend come in.”

When it comes to dividend growth stocks, there are two ways to approach them. The first is to look at companies with a history of increasing their annual dividend payout, such as Dividend Aristocrats.

These are stocks in the S&P 500 that have increased their dividends every year for at least 25 consecutive years and are considered among the best dividend-paying stocks on Wall Street.

The second way is to look at companies that are currently increasing their dividends and earnings and think of them as dividend-growing stocks.

From a business perspective, distributing dividends is always great. On the one hand, it tells investors that the company cares about them and is willing to share the profits. It also shows that the business is booming. Otherwise, it wouldn’t be about giving money in the first place!

Here are three names for investors looking for stocks to consider. They provide long-term income and capital appreciation.

MROMarathon oil$22.01
EXRExtra space storage$159.96

Marathon Oil (MRO)

Source: Jonathan Weiss/shutterstock.com

Marathon Oil (NYSE:MRO) is among the energy companies growing through mergers and acquisitions.

In November, MRO announced it was buying Eagle Ford’s assets from Ensign Natural Resources in a deal worth $3.0 billion. This move doubles the company’s stake in the Eagle Ford basin. And the purchase of these assets should result in immediate profit gains while creating future development opportunities.

The press release notes that the transaction indicates the deal is “immediately and significantly accretive” to Marathon Oil, suggesting it will significantly increase both operating cash flow and FCF.

Specifically, the acquisition is expected to result in a 17% increase in the company’s operating cash flow for 2023 while also resulting in a 15% increase in free cash flow.

From a dividend perspective, things can’t get any better. In terms of its ranking among the best dividend growth stocks, Marathon Oil announced an 11% increase in its quarterly payout at the end of January.

CEO Lee Tillman said in the company’s press release that this was the seventh increase to its base dividend in the past two years. According to the executive, this results in a total increase of more than 230% since the start of 2021.

Now I know what you might be thinking. Does the energy giant have what it takes to cover the dividend? You don’t need to worry for this purpose. Last year, Marathon generated about $4 billion in free cash flow, more than covering its dividend. And with a payout ratio of 7.80%, there’s plenty of room to increase the dividend.

Extra Space Storage (EXR)

Exterior of Extra Space Storage (EXR) facility and brand logo.

Source: Ken Wolter/Shutterstock.com

Extra space storage (NYSE:EXR), changing hands for less than $158, is a Utah-based real estate investment trust. It owns a portfolio of over 2,000 self-storage properties spread over 175 million square feet in the United States.

To improve its financial metrics, Extra Space Storage has notable expansion plans. In September 2022, for example, the REIT bought Storage Express for $590 million. Storage Express currently oversees 106 units and eight parcels of land in Indiana, Illinois, Kentucky and Ohio.

Additionally, Extra Space Storage acquired 186 locations in 2022, including acquisition and joint venture investment, for a total investment of $1.47 billion.

Additionally, Extra Space Storage is one of the best dividend growth stocks out there. Currently, the REIT pays a quarterly dividend of $1.62 per share, following an 8% increase earlier this year. Its annualized payout of $6.48 per share translates into an attractive dividend yield of 4.12%.

Equinix (EQIX)

Image of a well-lit data center

Source: Shutterstock

equinix (NASDAQ:EQIX), a pure-play data center REIT, is one of the few remaining industry leaders after significant consolidation. As a data center REIT, Equinix leases enterprise server space and operates server farms in its expansive warehouse-like facilities.

Equinix has achieved 80 consecutive quarters of revenue growth and operates more than 240 data centers around the world. In its most recent quarter, AFFO grew 11% year-on-year and on a normalized basis at constant currencies, reaching $2.714 billion. Shareholders also saw a 9% year-over-year increase or an 11% increase when normalized and adjusted for inflation.

About 36% of its customers are significantly involved in cloud computing, including major services such as Amazon Web Services, Microsoft Azure and Google Cloud.

Additionally, Equinix is ​​a stable dividend payer with an attractive yield. In the release of its latest financial statements, the REIT increased its dividend by 10% to $3.41 per share. The payout represents a 1.96% return on annual activity. Remember, growth is the key here. You cannot overlook the industry in which Equinix operates.

According Statisticala market size of $410.40 billion by 2027 is projected with a CAGR of 4.66% from 2023 to 2027. This suggests significant annual revenue growth potential for data centers in the coming years .

Equinix is ​​also recognized as one of the most environmentally friendly data center REITs in the world, with 95% renewable energy usage and a stated goal of achieving 100% renewable energy. The company has maintained a minimum of 90% green energy use since 2018.

At the date of publication, Faizan Farooque did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and many other financial sites. Faizan has several years of experience in stock market analysis and was a former data reporter at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions about their portfolio.


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
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