Often, firms are spun off from their parent organizations in an effort to remove a “slow-growth” asset/business that is keeping the parent corporation down. By getting rid of the slower growing asset, the parent has a chance to thrive on its own. But every once in a blue moon, the spin-off becomes something great in its own right. And in some cases, the spin-off becomes much more valuable.
This is exactly the case for our new Best Dividend Stocks List pick in the financial technology sector.
Since its spin-off during the Great Recession, our new pick has become a leader in its own right, carving out a successful niche – including offering banks, broker-dealers, mutual funds and corporate issuers customer communications, securities processing, and various data and analytics solutions. In fact, our pick delivers essential communications for more than 5,000 brands and processes more than $7 trillion worth of trades each day. This monopoly-sized moat has allowed our pick to become a strong dividend stock full of cash flows, low debt and growth potential.
The best part is that our pick still has a long runway for future growth and dividend increases.
Thanks to its high recurring revenue model, our firm continues to use M&A to create plenty of opportunities to its businesses. Meanwhile, the recent COVID-19 outbreak has placed a focus on video/virtual meetings. Here again, our pick has expanded its products to meet the needs of its clients. Add in the rising growth of ETFs, which our pick helps process and distribute, and you have a recipe for long-term success.
For investors, this success will translate into plenty of dividend growth and capital appreciation.
To summarize, here are five reasons why you should own this stock:
1. Massive moat and near monopoly in its niche helped the company produce more than $4 billion in sales last year.
2. Plenty of growth potential, thanks to regulation, analytics and new forays into video communication.
3. Increased its dividend for more than 10 years straight with last increase over 11%.
4. Acquisitions and M&A continue to fuel bolt-on growth.
5. Healthy payout ratio of 43% and growing yield of 2.04%.
Removal of an Industrial Name
Just as a firm can spin out shares, it can also merge. And that’s the case with our top pick in the aerospace sector. Thanks to a planned merger, our pick is no longer trading as a separate entity. As a result, we’ve been forced to remove it from our list after years of dividend growth and steady performance.
Our Best Dividend Stocks List has 20 of the highest-rated stocks by our proprietary rating system. Go Premium to find out the entire list.
