Retire Rich with These 3 Powerhouse Dividend Stocks

Stocks to buy

Dividend stocks offer stability and cash flow. These two traits can grow portfolios and put investors in better positions by the time they want to retire. 

As investors get older, they often take fewer risks. That’s because they have fewer years to recover from corrections and economic downturns. However, if retirement is at least a decade away, they can look for growth opportunities. Some stocks offer a good mix of growth and dividends, including these promising retirement stocks.

Microsoft (MSFT)

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It’s hard to go wrong with the world’s largest publicly traded corporation. Microsoft (NASDAQ:MSFT) boasts a $3.2 trillion market cap and a 16% year-to-date return. Shares are also up by 248% over the past five years. 

Microsoft has been growing its cloud platform as more businesses want to increase their efficiency and keep their data safe. Artificial intelligence is also revving up demand for this segment. Microsoft Cloud was the company’s main growth driver and largest segment. Revenue from this segment increased by 23% year-over-year to reach $35.1 billion in Q3 FY24. Overall revenue increased by 17% year-over-year to reach $61.9 billion.

Net income came in at $21.9 billion which is a 20% year-over-year increase. Microsoft is also growing in other verticals, such as business software, advertising, and gaming. The company offers a 0.70% yield and has maintained an annualized dividend growth rate of 10.60% over the past decade.

Visa (V)

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Visa (NYSE:V) has a low yield of 0.76% but makes up for it in several ways. The first distinction is its 18.05% annualized dividend growth rate over the past decade. By the time you retire, Visa will be delivering a much higher dividend for its investors. 

The credit and debit card issuer also has another advantage. Its products have become the fabric of commerce. People readily buy products and services with their plastic cards due to the convenience, security, and rewards that they provide. You will also need these cards to make online purchases where physical cash won’t work.

Visa’s Q2 FY24 earnings report demonstrates that the company is still growing at a solid pace. Revenue and net income were both up by 10% year-over-year. GAAP earnings per share inched up by 12% year-over-year. Visa stock is up by 6% year-to-date and has gained 70% over the past five years. Wall Street analysts believe that the “Strong Buy” stock can march higher by an additional 15% from current levels. This is one of the top dividend stocks on the market.

Texas Roadhouse (TXRH)

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Texas Roadhouse (NASDAQ:TXRH) is a reasonably valued restaurant chain that offers high growth and a respectable 1.45% yield. The stock is up by 41% year-to-date and has more than tripled over the past five years.

The company has reported solid revenue and earnings growth for several quarters, including the most recent one. Revenue increased by 12.5% year-over-year in Q1 2024 while net income was up by 31.0% year-over-year. Texas Roadhouse opened nine company restaurants and three franchise restaurants in the quarter. The company now has 753 restaurants which is a 7% year-over-year improvement from its 704 restaurants in Q1 2023.

Revenue and earnings should continue to grow as the company opens additional locations. Texas Roadhouse can then scale in the future and open additional locations. Franchising will make it easier for the company to expand. Texas Roadhouse already has a good yield, but it also has a solid dividend growth rate. The restaurant chain recently hiked its quarterly dividend from $0.55 per share to $0.61 per share. That’s a 10.9% year-over-year increase. If you are looking for dividend stocks, grab this one.

On this date of publication, Marc Guberti held long positions in MSFT and TXRH. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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