The "growth versus dividend" debate is eternal. The good news, however, is that with the three stocks listed below, you can get the best of both worlds: a recurring dividend payment as well as a good return. All three stocks have been high performers in 2019 and could continue to be next year too.
1. Target
Target (TGT 1.60%) has done a phenomenal job of creating value for its shareholders this year. Through the first eight months of the year it has risen by more than 60%. The retailer got a big boost in August when its Q2 results beat expectations, and the company raised its guidance for the year. Same-store sales growth of 3.4% continue to look strong, as the retail industry does not appear to be in bad shape despite concerns about a possible slowdown in the economy.
In addition to strong stock returns thus far, shareholders also earn a good dividend from the company, which yields 2.4% per year. It's a modest payout but one that's been growing over the years. A dividend aristocrat, Target has increased its dividend payments for more than four decades, with its latest increase being a 3.1% hike.
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A solid dividend payer and one of the top retailers in the country, Target is a great long-term hold, regardless of where the economy might be headed in the short term.
2. S&P Global
S&P Global (SPGI 1.34%) provides stock market intelligence and analytics that can contribute valuable information during all stages of the business cycle. The company has been experiencing a gradual but persistent increase in share price, rising more than 50% from January through to the end of October. S&P consistently posts strong numbers, with its most recent quarter reporting profits of $617 million, rising by 25% year over year. S&P has steadily been increasing its revenues over the years, rising from $5.3 billion in 2015 to $6.3 billion in 2018, for an increase of 18%.
The stock offers a modest dividend currently yielding just 0.9%. However, that would have been higher had it not been for the stock's high returns this year. Another dividend aristocrat, S&P has also increased its dividend for more than 40 consecutive years, with its most recent hike being a 14% increase in its quarterly payments from $0.50 to $0.57.
This is another great long-term hold not just for the dividend but because the insight and information that S&P provides are always going to be needed in the business world.
3. ResMed
ResMed (RMD 1.08%) provides the softest returns of all three stocks listed here, but it's still up over 30% this year as of the end of October. Although the stock got off to a rough start in January after the company fell short of expectations in Q2 of fiscal 2019, it has more than recovered since then. Most recently, its first-quarter results for fiscal 2020 were much more impressive: Revenues were up 16%, sending the stock soaring and reminding investors how quickly outlooks can change.
With strong profits over the years, the medical equipment company is another promising long-term hold for investors. It also offers a dividend of 1% per year. Although it's no aristocrat, paying a dividend only since 2012, the company has increased its payouts over the years. Dividend payments of $0.28 five years ago have since grown to $0.39, an increase of 39%, averaging a compounded annual growth rate of 6.9% during that time.
Key takeaways
All three stocks are promising long-term holds. However, for risk-averse investors, a stock like S&P might be the best choice, given not only its track record but that its business is a lot less vulnerable to industry conditions, as Target is, while not having the high research and development costs that a company involved in healthcare, like ResMed, might have to endure.
