As we delve into this discussion, we aim to shed light on some promising high dividend growth stocks. In the midst of 2024, an air of ambiguity caused by macroeconomic uncertainties, political instability during the election period, and a dent in the consumer’s trust forced many corporations to assume a defensive standpoint. This led to slower-than-expected progress in dividend growth. However, as we start seeing positive indicators of revival, we can anticipate a better yield for shareholders in 2025 that could come as dividends, share repurchases, or even debt reduction.
On its 40th anniversary, the NASDAQ 100 Index has witnessed its members grow significantly, leading to substantial free cash flow generation. This has allowed a considerable number of firms to begin issuing dividends for the first time. These novel declarations made up more than half of all US dividend pronouncements at the start of 2024.
Parallelly, although political uncertainties caused a slump in the growth of S&P 500 dividends by the close of 2024, financial forecasts from Ameriprise predict a positive turnaround with an 8% rebound in 2025. Firms in sectors such as information technology and consumer staples, known for their sufficient free cash flow and capital efficacy, are expected to augment shareholder distributions.
Potential cuts in corporate taxation in the coming year of 2025 could further improve the future prospects of returns for shareholders. In an era of heightened investor enthusiasm motivated by capital gains from artificial intelligence, it becomes imperative to recognize the significance of dividends in enhancing long-term portfolio performance.
From a historical perspective, reinvested dividends have contributed sizably to total equity returns, constituting around 55% of market enhancements between 1987 and the end of 2023. As global financial markets transition into a new stage, they seem to be on the brink of substantial dividend growth. This could be propelled not just by cyclical recovery but improved payout policies as well.
Now, financial analysts are predicting a noteworthy acceleration in global dividend per share growth. From the preceding 20-year average of 5.6% annually, the growth rate is expected to rise to a promising 7.6% in subsequent years.
Moving onto specific examples, we have Equinor ASA (NYSE:EQNR). In terms of revenue, its average growth rate over the last five years was 19.61% while its dividend yield as of July 7 was recorded at 9.71%. Equinor ASA (NYSE:EQNR), distinguished for its high growth, is an integrated global energy entity involved in resource exploration, production, and distribution of petroleum and alternate energy sources.
Equinor, in collaboration with its Fram partners, revealed plans on June 26 to channelize more than $2 billion into a new offshore project in the North Sea. The Fram Sør initiative, supported by an investment surpassing NOK 21 billion, is designed to amalgamate several offshore findings through a connection to Troll C. Equinor submitted its plan of development and operation to Minister Terje Aasland on June 26.
Another high growth stock to consider is Enterprise Products Partners L.P. (NYSE:EPD), which boasted an average 5-year revenue growth rate of 13.34% and a dividend yield standing at 6.85% as of July 7. Enterprise Products Partners L.P. (NYSE:EPD) is recognized as a leading high-growth stock. This midstream energy company offers an integrated infrastructure portfolio, encompassing pipelines, processing and fractionation facilities, storage assets, marine terminals, alongside marketing operations.
On June 23, UBS reasserted a Buy rating on EPD with a target price of $40. However, it brought down its forecast for Q2 2025 EBITDA for Enterprise Products from $2,516 million to $2,420 million. Regardless of this slight downgrading, EPD is still recognized as a robust income-producing asset, backed by a stable dividend yield.