In addition to strong top-line growth, these companies are expected to report healthy free cash flows. When it comes to dividend stocks, the focus is usually on established blue-chip companies known for their solid fundamentals and stable growth prospects, offering annualized total returns of 10% to 15%. However, there are also high-growth dividend stocks that can deliver impressive annualized returns, typically companies that have recently started paying dividends.
These stocks represent companies with potential for significant growth in free cash flows, even though their current yields may not be very attractive. Despite this, dividend growth is expected to be strong in the coming years. Furthermore, these high-growth dividend stocks are trading at appealing valuations, supporting the expectation of annual returns of 30% through 2027.
Miniso Group (MNSO) is one such company that appears undervalued with a forward P/E of 18.9. This lifestyle retailer has been experiencing substantial growth and currently offers a dividend yield of 2.06%. With revenue growth of 26% in Q1 2024 and plans to open 900 to 1,100 new stores annually between 2024 and 2028, Miniso is poised for continued growth.
Another high-growth dividend stock worth considering is Borr Drilling (BORR), an oil and gas drilling company trading at an attractive forward P/E of 35.17. Borr recently announced a 100% increase in dividends, indicating confidence in strong revenue and cash flow growth. With a healthy order intake and robust EBITDA projections, Borr Drilling is positioned for a significant rally.
Kinross Gold (KGC) has seen a strong rally of 74.5% in the last 12 months, benefiting from the upward trend in gold prices. With a forward P/E of 23.03 and a dividend yield of 1.44%, Kinross remains attractive. The company’s investment grade balance sheet and liquidity buffer provide flexibility for growth initiatives, suggesting potential for increased dividends, share repurchases, and acquisitions.
In conclusion, these high-growth dividend stocks present compelling investment opportunities with the potential for strong returns in the coming years.