When you think of high-growth tech stocks, you don't necessarily think dividend. You might be surprised to learn that MercadoLibre (NASDAQ:MELI) -- one of the world's foremost e-commerce and digital payments platforms -- paid a dividend, but suspended the payout to focus on growth. History shows that was a great decision.
In the Dividend Stock Hour that aired on Fool Live on Oct. 29, Fool.com contributor Danny Vena explains this counterintuitive concept.
Danny Vena: I'm going to go with one here that may surprise people. One of my favorite stocks for dividend growth is actually not paying a dividend right now. I caught you there, didn't I? A lot of folks that know me know that one of my favorite stocks out there is MercadoLibre, ticker MELI.
MercadoLibre is a e-commerce and payments giant in Latin America. They are the leader in almost every major market that they serve. Now, MercadoLibre previously paid a dividend, and they paid that dividend until 2018 when they suspended it because they decided that there were further growth opportunities in the business.
If you look at the ticker for this company since that has happened, you'll see that over the last couple of years, I'm going to pull up the chart here and then I'm going to share really quickly so I can get to both of my picks before we run out of time here. It's not working here. Let's try that again. Here we go, I'm sharing my screen.
MercadoLibre stock year-to-date is up ridiculously. It's gained a 125%. Over the last three years, it's up 445%. Management has made good on its word and taking that money and reinvested in the business to grow the stock. Now, the reason why MercadoLibre is my favorite is because management has already shown that they are willing to pay a dividend and that they have a lot of cash coming in to pay that dividend. I believe that sometime over the next year or two, they're going to reinstate that dividend, and once they do, with all the cash they're generating, they're going to be huge.