3 Dividend-Paying Growth Stocks to Buy and Hold for the Long Term

Stocks to buy

Dividend-paying growth stocks did not get much attention in the last few months. You can blame the general macroeconomic environment for this.

Rising inflation and a hawkish Fed is not the recipe for success. However, the situation also allows the savvy investor to pick up dividend-paying growth stocks at a discount.

And why not? One of the best ways to plan for volatility is to load up your portfolio with dividend-paying growth stocks.

Famed investor John D. Rockefeller once said, “The only thing that gives me pleasure is to see my dividend coming in.”

When it comes to dividend growth stocks, there are two ways to approach them. The first is to look at companies with a track record of hiking their annual dividend payout, like the Dividend Aristocrats.

These are S&P 500 stocks that have raised their dividends yearly for at least 25 consecutive years and are considered some of the best dividend stocks on Wall Street.

The second way is to consider companies currently growing their dividends and top and bottom lines and view them as dividend and growth stocks.

From a company perspective, giving out dividends is always great. For one thing, it tells investors the company cares and is willing to share profits. It also shows the company is thriving. Otherwise, it wouldn’t be giving out cash in the first place!

Here are three names worth considering for investors seeking stocks. They offer long-term income and capital appreciation.

Ticker Company Price
MRO Marathon Oil $22.01
EXR Extra Space Storage $159.96
EQIX Equinix $702.58

Marathon Oil (MRO)

Source: Jonathan Weiss/shutterstock.com

Marathon Oil (NYSE:MRO) is among the energy companies expanding through mergers and acquisitions.

In November, MRO said it was purchasing Ensign Natural Resources’ Eagle Ford assets in a transaction worth $3.0 billion. This move doubles the company’s stake in the Eagle Ford basin. And purchasing these assets is expected to result in immediate earnings gains while creating future development opportunities.

The press release highlights that the transaction said the deal is “immediately and significantly accretive” to Marathon Oil, suggesting it will significantly hike both operating cash flow and FCF.

Specifically, the acquisition is projected to cause a 17% rise in the company’s operating cash flow for 2023 while also resulting in a 15% increase in free cash flow.

From the dividend point of view, things cannot get better. Regarding its ranking among the top dividend growth stocks, Marathon Oil announced a rise of 11% in its quarterly payout at the end of January.

CEO Lee Tillman stated in the company’s press release that this is the seventh increase to their base dividend over the past two years. According to the executive, resulting in a total increase of more than 230% since the beginning of 2021.

Now, I know what you might be thinking. Does the energy giant have what it takes to cover the dividend? You need not worry on that end. Last year, Marathon generated approximately $4 billion of free cash flow, which handsomely covers its dividend. And with a payout ratio of 7.80%, there is plenty of room to grow the dividend.

Extra Space Storage (EXR)

Source: Ken Wolter / Shutterstock.com

Extra Space Storage (NYSE:EXR), changing hands for under $158, is a Utah-based real estate investment trust. It holds a portfolio of over 2000 self-storage properties spread across 175 million square feet in the U.S.

To improve its financial metrics, Extra Space Storage has notable expansion plans. In September 2022, for example, the REIT purchased Storage Express for $590 million. Storage Express currently oversees 106 units and eight land parcels across Indiana, Illinois, Kentucky, and Ohio.

Moreover, Extra Space Storage acquired 186 locations in 2022, including the acquisition and joint venture investment, for a total investment of $1.47 billion.

In addition, Extra Space Storage is one of the top dividend growth stocks in the market. Presently, the REIT provides a quarterly dividend of $1.62 per share, following an 8% hike earlier this year. Its annualized payout of $6.48 per share translates into an attractive dividend yield of 4.12%.

Equinix (EQIX)

Source: Shutterstock

Equinix (NASDAQ:EQIX), a pure-play data center real estate investment trust, is one of the few remaining leaders in the industry after significant consolidation. As a data center REIT, Equinix leases enterprise server space and operates the server farms within its vast warehouse-like facilities.

Equinix has achieved 80 consecutive quarters of revenue growth and operates over 240 data centers across the globe. In its latest reported quarter, AFFO grew by 11% year-on-year and on a normalized, constant currency basis, reaching $2.714 billion. Shareholders also saw a 9% hike year-on-year or an 11% increase when normalized and adjusted for inflation.

Roughly 36% of its clients are significantly involved in cloud computing, including major services such as Amazon Web Services, Microsoft Azure, and Google Cloud.

Additionally, Equinix is a stable dividend payer with an attractive yield. In reporting its latest financials, the REIT increased its dividend by 10% to $3.41 per share. The payout represents a yield of 1.96% on an annual business. Remember, growth is key here. You cannot discount the industry in which Equinix operates.

According to Statista, a market size of $410.40 billion by 2027 is projected with a CAGR of 4.66% from 2023 to 2027. This suggests significant annual revenue growth potential for data centers in the coming years.

Equinix is also recognized as one of the most environmentally-friendly data centers REITs worldwide, with a 95% usage of renewable energy and a stated aim of achieving 100% renewable energy. The company has maintained a minimum of 90% use of green energy since 2018.

On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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