While high dividend yield sounds attractive, it can be a trap sometime. Quite often, the investors after getting lured into investing in High Dividend Stocks realise that all the dividends were coming at the expense of potential growth of the company.
Such Dividend Paying Companies soon become unable to maintain the consistency or end up with dwindling dividends.
These three Best Dividend Stocks have the potential for consistent growth
Korvest Limited (ASX: KOV)
Korvest Limited (ASX: KOV) reported its half-yearly financial results on 22 January 2024 for the six months ended 31 December 2023.
The positive outlook for the company stems from its progressive key activities, which are anticipated to maintain their level of consistency in the first half. According to the company, the second half of the year will see similar activity levels in the major projects, small projects, and daily markets, all of which are expected to remain strong despite wider economic conditions. Despite the course of substantial operational activities, the working capital levels still remain steady
Completing ongoing emission reduction projects and examining prospects for additional reductions will be major priorities for FY2024. A profit after tax of $11.2 million in 2023 was another stellar fiscal year, narrowly missing the record of $11.3 million set in 2022.
The record revenue of $107.5 million was the reason for this outcome. Korvest's revenue has surpassed $100 million for the first time. The positive free cash flow-generating ability of the company year over year is another key metric that indicates its potential to reinvest in the growth of Capex. Debt is at a significantly low level. Overall, the fundamentals suggest there is immense potential in the core business of the company.
BSP Financial Group Limited (ASX: BFL)
BFL has maintained a solid track record of growth and performance over the years. From December 2014 to December 2023, gross loans surged by an impressive 134%, indicating robust lending activity and expansion of the loan portfolio.
Net profit after tax (NPAT) experienced significant growth, rising by 75% between fiscal years 2014 and 2023, highlighting effective cost management and increasing profitability. Total assets witnessed remarkable expansion, soaring by 133%, reflecting the company's overall growth and expanding scale of operations. Moreover, liquid assets saw substantial growth, increasing by 127%, underscoring the emphasis on maintaining sufficient liquidity to meet financial obligations and support business activities.
The fiscal year 2023 marked robust growth for the company across various financial metrics, bolstered further by currency exchange translations, which enhanced overall growth rates. Notably, the company's primary lending division sustained strong performance, evidenced by a significant 8% growth in Net Interest Income compared to FY22. Additionally, divisions contributing relatively lower revenue displayed exceptional growth rates during the year, with BFL's FX income and Insurance/other income growing by 30% and 25% respectively after currency conversion to Australian dollars. This underscores the company's strong and resilient operational position, demonstrating its ability to deliver consistent profitability year on year and supporting strong dividend payments for shareholders.
BFL holds a prominent position as one of the largest financial services companies in the growing South Pacific region. BFL maintains a robust cash position that has supported reliable dividend payments in recent years, presenting an attractive income opportunity for investors.
Looking ahead to 2024, there is potential for BFL's earnings and cash generation to further improve, driven by anticipated enhanced business activity.
The company's strategic partnership with the PNG government, including plans to leverage their business loan program to stimulate increased lending activity, underscores BFL's proactive approach to long-term value creation.
Westpac Banking Corporation (ASX: WBC)
Westpac Banking Corporation announced its half-year results for the period ending 31 March 2024, on 6 May 2024. During this reported period, net interest income remained steady at $9,127 million. The 3% increase in average interest-earning assets was primarily driven by a 4% growth in average loans, particularly in Australian business lending and mortgages.
Total loans increased by 5% to $784.8 billion, including a 5% growth in Australian housing loans (at 1.1 times system growth) and a 9% growth in Australian business lending.
Deposits also saw growth, increasing by 4% to $650.9 billion, with strong growth in consumer deposits at 9%. The company maintained cash balances of $95.9 billion as of 31 March 2024.
Looking ahead to a relatively longer time frame, the bank expects economic growth to be robust, with a projected increase of 1.6% in 2024 and a further 2.5% in 2025. These forecasts suggest favourable operating conditions for the company over the next couple of years.
Considered among Best Long Term Dividend Stocks, Westpac's primary investment appeal lies in its robust operational foundation, consistently delivering strong year-on-year growth rates and substantial monetary value. This is exemplified by its revenue growth, which increased from $16.9 billion in 2019 to $18.3 billion in 2023, as well as a rise in net income from $6.7 billion to $7.2 billion during the same period.
Furthermore, Westpac's strong earnings have facilitated an attractive income-generating proposition for investors, evidenced by a robust dividend yield. With an anticipated improvement in the economic outlook and a strengthened balance sheet featuring substantial liquidity and enhanced credit quality, the company is poised for a period of growth and sustained delivery of shareholder value in the years ahead.
Source: Company's Report
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