My Favorite Under-the-Radar Dividend Growth Stock is About to Pop

Dividend Growth, Income Investing
by Tim Plaehn
Subscribe to all of Tim Plaehn’s free investing research

One of my favorite dividend growth stocks continues to fly under the radar.

Sure, the stock price has doubled over the last three years, but this company is just getting started on its growth trajectory.

And its latest div

Rising stacks of coins against dark background

My Monthly Dividend Multiplier service focuses on dividend growth stocks to generate long-term compounding total returns. Stock prices of companies that grow their dividends inevitably appreciate. I use the rough math that the compounding annual return will end up very close to the average yield plus the average growth rate.

The total returns are not readily visible through the shorter-term market gyrations. However, as you own this type of stock for years, the targeted returns will appear in your portfolio.

For the Monthly Dividend Multiplier portfolio, I look for stocks where the yield plus dividend growth total is in the low to mid-teens. I want the portfolio to appreciate, on average, by 15% per year. That compound growth level will double your account value every five years. My model portfolio has returned an average of 4.3% per quarter for the last four-plus years.

One of the Monthly Dividend Multiplier portfolio stocks recently announced a massive dividend increase for 2024. The initial announcement came in stealth mode, with the CEO announcing the 2024 dividend rate that will start paying in May.

For 2023, Blue Owl Capital Inc. (OWL) paid a $0.14 quarterly dividend, giving a $0.56-per-share annual payout. During the fourth quarter earnings management call, CEO Marc Lipschultz stated that the annual dividend would increase to $0.72 for 2024. The result is a 29% dividend boost for this year. Based on the current $18.00 share price, OWL yields 4.2% with the new dividend rate.

Three years ago, OWL traded for about $10.00 per share. At that time the dividend was $0.08 per share quarterly, $0.32 annually. The dividend has more than doubled, and the share price has almost doubled.

Blue Owl Capital has been a public company for a little over three years. It has a lot of growth ahead. The Blue Owl business is similar to Blackstone Inc. (BX), which has a $150 billion market cap; Blue Owl has a comparatively small $25 billion market value. OWL is one of about 20 stocks in my Monthly Dividend Multiplier recommended portfolio. I expect the investment to produce excellent returns over the upcoming years. But then, I expect the entire portfolio to put up great returns, too.

Author: Tim PlaehnTim is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory focused on creating a high-yield income stream and it's companion service The Dividend Hunter Insiders, Weekly Income Accelerator, a covered call trading service, and for investors looking for long-term total returns from their income investments using stocks with ever-growing dividend payments, he offers Monthly Dividend Multiplier. He co-edits POWR Income with Jay Soloff. Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F-16 Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U.S., Europe, and Asia. Tim graduated from the United States Air Force Academy with a degree in mathematics. In his free time he tours the United States parks, campgrounds, and wilderness areas in his travel trailer.
Subscribe to all of Tim Plaehn’s free investing research