When it comes to dividend stocks, bigger isn't always better. Instead of focusing on yield alone, savvy investors find companies with the ability to both back and boost their dividends. Here are three under-the-radar dividend stocks at the top of Fisher's holdings.
Qualcomm (NASDAQ: QCOM ) develops new technologies and then licenses the rights to use its patented technology. For example, networks being upgraded to 4G (fourth generation) are based on a technology developed by Qualcomm. By holding the patents, Qualcomm collects royalties from smartphone and tablet makers that use it. Also, as Android-based devices (commonly run on Qualcomm's Snapdragon chip) continue to snatch market share, Qualcomm will likely benefit. And China presents a major opportunity for the San Diego-based company as consumers upgrade to smartphones and China Mobile, the world's biggest carrier, rolls out its 4G network with technology that Qualcomm dominates.
Qualcomm's dividend yields 2.1%, but the real power in its dividend is its growth story. The tech company recently raised its payout by more than 20% and has increased it by 147% over the past five years. Better yet, the payout ratio for Qualcomm's dividend now stands at 33%, indicating that the company has plenty of room to further grow its dividend.
Comcast (NASDAQ: CMCSA ) is the largest cable operator in the United States. The company acquired full ownership of NBC Universal last year. Comcast recently reported a very strong quarter, with NBC Universal driving both revenue and earnings. Watch for Comcast to deliver further improved operating margins at NBC Universal as it integrates operations going forward. In addition, owning content somewhat insulates Comcast from rising content costs. Also, Comcast's interconnection pact with Netflix could enhance both companies' content-distribution and marketing abilities.
The telecom behemoth's dividend yields 1.8% and has been increased by 233% in five years. Its 30% dividend payout ratio gives the company leeway to raise the payout, which is well-supported by strong cash flow and earnings. As Comcast's margins grow, the company will have even more room to increase its dividend.
Disney's (NYSE: DIS ) massive empire, which includes a world-renowned brand, theme parks, television, and movies, gives the company a diversified stream of revenue. Its sometimes overlooked cable networks account for almost half of company revenues and two-thirds of operating profit. Disney's successful Lucasfilm, Marvel, and Pixar acquisitions are generating seemingly endless billion-dollar movie franchises and assets that will likely create shareholder value for years to come. And Disney's recent $1 billion investment in FastPass+ ride reservation technology will make it a smarter -- and likely even more profitable -- company in the future.
Disney's dividend yields a mere 1.1%, but its payout ratio is a healthy 24%, which leaves lots of room for further growth. The company increased its dividend 15% last year and nearly 146% over the past five years. Not only do your grandkids and Fisher love Disney, but our Motley Fool CAPS community crowns it a 5-star (out of 5) stock.
Savvy investors like Fisher don't ignore companies with a lower initial dividend. By overlooking companies that pay smaller yields, you may be missing out on the best dividend growth stocks of the coming decade.
Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.