Dividend stocks are often seen as safe, dependable investments for generating recurring income. They're not usually associated with growth -- but that isn't always the case. The three non-tech stocks below have generated impressive returns over the past decade, and also pay dividends.
Let's see how Novo Nordisk (NVO 0.84%), Mastercard (MA 0.07%), and Costco Wholesale (COST 1.01%) have managed to accomplish that feat -- and whether they still make good investments today.
1. Novo Nordisk
Novo Nordisk stock pays a dividend that yields 1.1%. It's not a huge payout by any means, but it's a respectable one for a growth stock; it can help pad your returns over the years and give you some modest recurring income. On a $25,000 investment, you could expect to collect about $275 from the stock over the course of a full year.
But that's probably not why you'd consider the stock for your portfolio. Instead, it's the company's promising obesity and diabetes treatments that will be the key reasons for holding the stock for the long haul. Ozempic and Wegovy have become popular names on social media due to their ability to help people lose weight. And although Ozempic is a diabetes drug and it's not approved for weight loss, people have been taking it for that anyway.
If you had invested $25,000 into the business 10 years ago, it would be worth more than $130,000 today. However, most of those gains have come within just the past few years -- coinciding with the excitement surrounding Ozempic, and to a lesser extent, Wegovy.
The biggest problem Novo Nordisk faces today is making sure it has enough supply on hand for its drugs. It's working on adding capacity. And as it expands into more markets and pumps out more of its products, there could be much more revenue and profit growth along the way. Through the first half of this year, the company generated profit growth of 43%.
At 42 times earnings, Novo Nordisk isn't a cheap stock to own. But it wouldn't be surprising to see it continue to rise in value as the need for obesity care isn't going away anytime soon. That should ensure that its products remain in high demand for the foreseeable future.
2. Mastercard
Credit card giant Mastercard pays investors an even lower yield of 0.6%. A $25,000 investment in the business would net you approximately $150 in annual dividends. But as with Novo Nordisk, what appeals to investors here is the opportunity for long-term growth.
Whether the economy is in good shape or not, credit card use remains strong, and that's evident in the company's impressive growth. Mastercard's year-to-date revenue of $12 billion is up 13% from the same period last year. And for the most recent quarter (which ended in June), the company noted impressive cross-border travel volumes -- 154% of 2019 levels.
A $25,000 investment into this business 10 years ago would now be worth $145,000. That's not a bad return for a fairly stable company. Shares of Mastercard are trading at 37 times earnings, but with continued growth, this may also be a decent buy despite the high multiple.
3. Costco Wholesale
Costco's dividend yield of 0.7% is also not that high, comparable to Mastercard's. But the yield can be a bit misleading as the company has paid special dividends in previous years.
In 2020, for example, it paid a mammoth $10 per share in special dividends due to the great year it had as a result of pandemic-induced spending. A $10-per-share special dividend is more than double the $4.08 that it currently pays on an annual basis. Special dividends may be rare, but Costco investors can benefit from a sizable dividend when the company does extraordinarily well.
The big-box retailer continues to chug along, demonstrating its resiliency with strong numbers even as it goes up against tougher comparables from the previous year. Revenue of $78.9 billion for the period ended Sept. 3 was up more than 9% from the same period last year. There are, however, signs that things are slowing down. Costco's comparable-store sales during the period, for example, were only up 1.1%.
Investors who bought $25,000 worth of Costco stock a decade ago would now be holding an investment worth $123,000. The retailer's strong growth over the years has made this an excellent stock for long-term investors to hold.
The stock, however, is a bit pricey right now. It trades at 40 times its earnings. If you're planning to hold on to it for a decade or more, it can still be a good buy. But at today's valuation, there could be some softness in the near term, especially if Costco's comparable-store sales numbers continue to struggle.
