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FEATURED ARTICLE |
The Cheap List: 5 Dividend Growers Smart Money Is Accumulating |
Hey there, bargain hunter — |
Let's talk about something most growth chasers overlook. |
Dividends. |
Not the 8% yield that screams "trap."
Not the bond proxies that move two cents a week. |
I'm talking about companies that: |
• Are growing their payouts
• Are generating real free cash flow
• Have manageable payout ratios
• And still trade at reasonable valuations |
Because here's the truth most investors miss: |
Dividend growth is one of the cleanest tells that management believes future cash flow is durable. |
And when dividend growth intersects with strong fundamentals and modest multiples? |
That's where the "cheap list" starts to get interesting. |
Today we're breaking down five names that combine: |
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These aren't sleepy retirees' stocks. |
These are capital-return machines with potential torque. |
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1) Broadcom (AVGO) — Dividend Growth in an AI Cash Machine |
Let's start with the least "income-looking" name on this list. |
Broadcom's yield sits under 1%. That doesn't scream income play. |
But yield is only half the story. |
Broadcom increased its quarterly dividend by 10% recently to $0.65 per share — or $2.60 annualized. That marks another year of double-digit dividend growth. |
Over the past year: |
Dividend growth: ~11–12% 5-year dividend CAGR: ~12%+ Free cash flow (FY2025): ~$26.9 billion Payout ratio: roughly 48–50%
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Now here's why that matters. |
Broadcom isn't funding dividends with debt.
It's funding dividends with AI-fueled cash flow. |
AI infrastructure demand continues to drive data center revenue growth north of 60% year over year in recent quarters. Meanwhile, Broadcom's software segment (including VMware assets) adds recurring revenue and stabilizes margins. |
Cheap Investor lens: |
This is a growth company paying you more every year while still reinvesting heavily. |
Valuation-wise, Broadcom trades at a forward multiple that's not cheap in absolute terms — but when you compare: |
growth rate margin profile cash flow yield and capital return
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…it doesn't look stretched relative to megacap AI peers. |
Active angle:
Dividend reassurance during AI volatility can act as a floor.
When tech wobbles, dividend growth tech tends to attract capital rotation. |
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2) AbbVie (ABBV) — Defensive Cash Flow With Real Yield |
AbbVie is what I call "boring in the right way." |
Forward yield: ~3%
Annual dividend: ~$6.92 per share
Dividend growth streak: decades
Free cash flow coverage: solid relative to payout |
Healthcare is one of the few sectors where: |
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AbbVie's challenge has been patent cliffs and product transitions. But pipeline execution and diversification have stabilized investor confidence. |
Dividend growth has slowed from double-digit years to mid-single digits recently — around ~5–6% — but that's still healthy given its size and yield. |
Here's the Cheap Investor insight: |
When a 3% yielder continues growing at 5–7% annually, your income doubles roughly every decade. |
But what makes AbbVie interesting now isn't just income — it's valuation compression during biotech volatility. |
Healthcare often becomes a "risk-off" rotation destination when macro anxiety spikes. |
If bond yields soften, high-quality dividend growers like AbbVie get a relative boost. |
Risks: |
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But cash flow remains strong enough to sustain dividend growth. |
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3) Texas Instruments (TXN) — The Shareholder-Friendly Semiconductor |
Texas Instruments is a fascinating hybrid: |
Semiconductor exposure
Industrial end-market footprint
Relentless capital return policy |
TI has emphasized dividend growth for years, often raising payouts annually. |
What makes TXN compelling now is the expectation of improving free cash flow per share, potentially rising toward $8–$12 by 2026. |
Semiconductors are cyclical — but TI's focus on analog and embedded chips makes revenue less volatile than consumer-heavy chipmakers. |
Dividend characteristics: |
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Cheap Investor insight: |
When cyclicals trade down, yield often rises mechanically. |
That can create value windows where: |
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TXN doesn't require AI euphoria to work.
It requires industrial stability and capital discipline. |
That's a quieter bet — and those often outperform expectations. |
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4) ConocoPhillips (COP) — Energy Yield With Capital Discipline |
Energy is never boring — but disciplined energy can be powerful. |
ConocoPhillips has leaned heavily into shareholder returns: |
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What's different this cycle? |
Balance sheets are stronger.
Capex discipline is tighter.
Shareholder return frameworks are clearer. |
The stock doesn't need oil at $120 to sustain returns. |
Even in moderate pricing environments, COP can generate free cash flow that supports dividends and buybacks. |
Cheap Investor angle: |
Energy dividend growers offer two levers: |
yield support commodity upside
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If macro stress pushes inflation narratives higher, energy can catch rotation. |
Risks: |
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But compared to prior cycles, the industry is less reckless. |
That changes the risk profile. |
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5) Verizon (VZ) — The High Yield That Refuses to Die |
Verizon is the highest yield on this list: |
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Telecom is not sexy.
But boring cash flow has value when volatility rises. |
Verizon's issue has been: |
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However: |
The dividend remains covered by operating cash flow.
And as bond yields fluctuate, Verizon's yield spread versus Treasuries becomes a major factor. |
Cheap Investor insight: |
High yield + stable cash flow + compressed multiple = asymmetric setup if macro softens. |
When growth names sell off, capital often rotates into defensive high yielders. |
Verizon doesn't need explosive earnings growth to work.
It just needs stability. |
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The Bigger Picture: Why Dividend Growth Matters More Now |
Dividend growth tells you three things: |
Management believes cash flow is durable Balance sheet isn't stretched Capital allocation is disciplined
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In volatile markets, capital seeks: |
safety income and durability
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But the best dividend plays aren't static yield traps. |
They are companies where: |
free cash flow is expanding payout ratios are sustainable and earnings growth still exists
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That's where total return comes from. |
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The Cheap Investor Playbook |
If you're positioning around these names, think in frameworks: |
1) Yield as Support |
Stocks with rising dividends often find buyers near ex-dividend dates. |
2) Relative Rotation |
Watch when: |
tech cools → dividend growth tech gains macro risk rises → healthcare & telecom bid inflation narratives return → energy rerates
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3) Event-Driven Volatility |
Earnings + dividend increases = powerful catalyst combo. |
When a company: |
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…you often see multi-session momentum. |
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Final Takeaway |
Dividend growth is not about clipping coupons. |
It's about capital discipline. |
And when that discipline exists inside: |
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…you get a diversified set of cash-return stories with different macro sensitivities. |
That's what makes this a "cheap list." |
Not because they're all low P/E.
Not because they all yield 6%. |
But because they combine: |
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And in this market, that combination is harder to find than people think. |
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investing involves risk, including the potential loss of principal. Always do your own research before making investment decisions. |
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