There is little doubt that owning quality stocks and owning them is the surest path to long-term financial security. Steady dividend payers can help increase results and increase the value of a portfolio at regular intervals, such as hourly work. Adding an investment timeline of years, if not decades, lets the power of time and composition work for you. It creates a virtual trifecta of wealth creation.
On this clip from Motley Fool Live, recorded on February 12, The Wrap host contributor Jason Hall and Fool.com contributors Danny Vena and Jamal Carnette recommend three dividend shares that could make investors a fortune in the long run.
Jason Hall: I have one that I’m going to grab here quickly that we can all call. This is Richard Oz: “The creation of a dividend growth portfolio for young adults should provide a compilation of wealth creation later in life.” Proclaim it, preach it. “Can you comment on creating portfolios for young adults?”
This is what I want to do. We are going to answer each of us your question here. Give us your best dividend growth businesses in your respective wheelhouse.
I’m going to use the stock I just talked about as my potential 10 dredger over the next 10-15 years, CareTrust REIT (NASDAQ: CTRE)It is a $ 2 billion investment trust and pays a 4% dividend yield at recent prices. They have increased the dividend every year since they went public. They doubled the dividend in five years. It is a $ 2 billion dollar company with incredible leadership in an industry that is likely to double in size or more over the next decade, and grow from there. Who wants to go here next, Jamal?
Jamal Carnette: I will jump here and for a long term I look to long term managers when I want to buy shares, especially if you want to buy shares for kids or children. I think a stock with a long runway. This is obviously one of the bigger stocks at the moment, Microsoft (NASDAQ: MSFT).
But at the moment, you are sitting with more than ten decades of returns from the internet of things and only increased cloud usage. I remember, I think it was many decades ago when they started introducing their dividend and have since grown like a weed. If you want to buy shares for young children, and you are looking for the dividend producers with a growth story of more than decades, and I think Microsoft with the dividend it is currently paying, it is low, but it will continue to grow quite significantly.
Hall: I like that. You do not have to find a high return, do you?
Notebook: Right.
Hall: A lower return, but a huge double-digit annual [laughs] growth can really pay off over time, because it also means a business that increases its cash flow, so that’s really important. Danny, bring us home to your favorite share of dividend growth.
Danny Vena: When you talk about cash flow, it’s hard to talk about cash flow without talking about my favorite dividend stock. appeal (NASDAQ: AAPL). If you look at Apple since its dividend was reinstated, the dividend it pays, even though the return is very low, is the reason why the return is low, because the company has grown so much, the share price has grown so much, the cap has so much has grown, but the dividend has more than doubled.
I would say if you look at the things that are currently going on with Apple, they have almost a billion iPhones in the wild. It is estimated that about 350 million of the iPhones are in the window that need to be replaced. The more iPhones you get there, the bigger the market grows, the more people are interested in buying carriers, the more people will be interested in joining Apple’s ecosystem of services, which is getting bigger every year. I think at least for the next decade you would be really hard pressed to find a better, safer dividend stock than Apple.
Hall: Absolutely love it guys. Well, there you have it. We have CareTrust REIT, Microsoft and Apple. I think it’s three [laughs] really strong choices here.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! When we question an investment thesis – even one of our own – it helps us all to think critically about investing and to make decisions that help us become smarter, happier and richer.