Insights

These Dividend Stocks Can Double Your Money in Under 5 Years

While looking for dividend-growth stocks that can double in the next five years may feel like a daunting undertaking, reframing the task as searching for companies that can grow by 16% annually helps it feel more approachable. 
This reframing seems especially true when you consider that the two businesses we will look at here have grown their top lines by 35% and 77% in just the last year.
Thanks to these favorable revenue growth rates, robust profit margins, and easily funded, growing dividends, this duo could potentially double your money in five years and create passive income to help fund your retirement.
Image source: Getty Images.

1. Old Dominion Freight Line
Operating exclusively within the trucking industry’s less-than-truckload (LTL) niche, Old Dominion Freight Line (NASDAQ: ODFL) has been one of the most successful S&P 500 index stocks over the last 10 years, rising more than 1,300%.
While Old Dominion is not a true market leader in the LTL space — accounting for a 10% market share among the 25 largest LTL companies in North America — it is the most profitable.

ODFL Profit Margin (Quarterly) data by YCharts
Driving this outsized profitability for the company, relative to its peers, is the premium price it can charge due to its historically strong customer service and value proposition. Mastio and Co., an industrials-focused research firm, has given Old Dominion its Mastio Quality Award for #1 National Shipper for 12 consecutive years.
To highlight why Old Dominion keeps receiving this award, consider that its on-time services have improved from 94% in 2002 to above 99% today, while its cargo claims ratio (or the percentage of lost or damaged loads) has dropped from 1.5% to 0.2% over the same time.
Posting revenue and earnings per share (EPS) growth of 33% and 53% year over year for the first quarter of 2022, Old Dominion looks like a strong contender to double over the next five years. While the company’s dividend yield may only be 0.4%, a minuscule payout ratio of 9% means it has ample funding for dividend increases — such as the 50% boost the board handed out in February.
2. Texas Pacific Land 
Rising out of the ashes of the Texas and Pacific Railway bankruptcy, Texas Pacific Land (NYSE: TPL) may be one of the most peculiar stocks trading today. Thanks to its 880,000 acres of land located primarily in the Permian Basin, the company is traditionally viewed as a play on oil and gas thanks to the royalties it receives from producers using its land.
Generating 21,000 barrels of oil equivalent daily as of the first quarter in 2022, Texas Pacific has seen incredible success from the royalties stemming from this production — leading to a rise in its share price of nearly 3,000% over the last decade.
However, despite this incredible success, the company plans to become much more than just an oil and gas investment.
In May, Texas Pacific announced a partnership with Mawson Infrastructure Group and JAI Energy to develop a 60-megawatt Bitcoin mining operation. Speaking about the deal, CEO Tyler Glover explained, “For TPL, our shareholders will benefit from a unique royalty stream while retaining an option to participate as an equity partner.” With operations set to begin in the fourth quarter of 2022, investors should keep an eye out for updates in the coming months.
Furthermore, a few days ago, Texas Pacific signed a letter of intent with Milestone Carbon to study whether its land would be suitable for carbon capture and the sequestration of CO2. The evaluation will take place on 21,000 acres of its property and would potentially create a new revenue stream for the company.
These upstart operations, paired with Texas Pacific’s steady oil and gas royalties, make its 0.7% dividend and meager 27% payout ratio even more appealing. 

TPL Dividends Paid (TTM) data by YCharts
Not including the occasional special dividends paid over the last few years (included in the chart), Texas Pacific has increased its scheduled payments annually over the previous 18 years while maintaining a low payout ratio.
Thanks to the state of the current oil industry, the company’s budding optionality, and its incredible dividend growth, Texas Pacific looks like a great candidate to double over the next five years.
Substantial dividend growth potential
While dividend yields of 0.4% and 0.7% may not catch the attention of most investors, five-year annualized dividend growth rates of 72% and 105% should.
Metric
Old Dominion
Texas Pacific
Dividend yield
0.4%
0.7%
Payout ratio
9%
27%
Consecutive years of dividend growth
Five years
18 years
Five-year annualized dividend growth rate
72%
105%
Data source: Ycharts. Dividend potential = dividend yield/payout ratio 
Furthermore, if you had purchased Old Dominion and Texas Pacific just five years ago, you would already be yielding 1.7% and 3.9%, respectively, on your original cost, thanks to each company’s incredible dividend growth rates. 
These growth rates, paired with each company’s dividend potential and robust underlying operations, give each stock the potential to double in five years and handsomely reward shareholders over the long term through rising dividends.
Josh Kohn-Lindquist has positions in Bitcoin and Texas Pacific Land Corporation. The Motley Fool has positions in and recommends Bitcoin and Old Dominion Freight Line. The Motley Fool recommends XPO Logistics. The Motley Fool has a disclosure policy. –

While looking for dividend-growth stocks that can double in the next five years may feel like a daunting undertaking, reframing the task as searching for companies that can grow by 16% annually helps it feel more approachable. 

This reframing seems especially true when you consider that the two businesses we will look at here have grown their top lines by 35% and 77% in just the last year.

Thanks to these favorable revenue growth rates, robust profit margins, and easily funded, growing dividends, this duo could potentially double your money in five years and create passive income to help fund your retirement.

Image source: Getty Images.

1. Old Dominion Freight Line

Operating exclusively within the trucking industry’s less-than-truckload (LTL) niche, Old Dominion Freight Line (NASDAQ: ODFL) has been one of the most successful S&P 500 index stocks over the last 10 years, rising more than 1,300%.

While Old Dominion is not a true market leader in the LTL space — accounting for a 10% market share among the 25 largest LTL companies in North America — it is the most profitable.

ODFL Profit Margin (Quarterly) data by YCharts

Driving this outsized profitability for the company, relative to its peers, is the premium price it can charge due to its historically strong customer service and value proposition. Mastio and Co., an industrials-focused research firm, has given Old Dominion its Mastio Quality Award for #1 National Shipper for 12 consecutive years.

To highlight why Old Dominion keeps receiving this award, consider that its on-time services have improved from 94% in 2002 to above 99% today, while its cargo claims ratio (or the percentage of lost or damaged loads) has dropped from 1.5% to 0.2% over the same time.

Posting revenue and earnings per share (EPS) growth of 33% and 53% year over year for the first quarter of 2022, Old Dominion looks like a strong contender to double over the next five years. While the company’s dividend yield may only be 0.4%, a minuscule payout ratio of 9% means it has ample funding for dividend increases — such as the 50% boost the board handed out in February.

2. Texas Pacific Land 

Rising out of the ashes of the Texas and Pacific Railway bankruptcy, Texas Pacific Land (NYSE: TPL) may be one of the most peculiar stocks trading today. Thanks to its 880,000 acres of land located primarily in the Permian Basin, the company is traditionally viewed as a play on oil and gas thanks to the royalties it receives from producers using its land.

Generating 21,000 barrels of oil equivalent daily as of the first quarter in 2022, Texas Pacific has seen incredible success from the royalties stemming from this production — leading to a rise in its share price of nearly 3,000% over the last decade.

However, despite this incredible success, the company plans to become much more than just an oil and gas investment.

In May, Texas Pacific announced a partnership with Mawson Infrastructure Group and JAI Energy to develop a 60-megawatt Bitcoin mining operation. Speaking about the deal, CEO Tyler Glover explained, “For TPL, our shareholders will benefit from a unique royalty stream while retaining an option to participate as an equity partner.” With operations set to begin in the fourth quarter of 2022, investors should keep an eye out for updates in the coming months.

Furthermore, a few days ago, Texas Pacific signed a letter of intent with Milestone Carbon to study whether its land would be suitable for carbon capture and the sequestration of CO2. The evaluation will take place on 21,000 acres of its property and would potentially create a new revenue stream for the company.

These upstart operations, paired with Texas Pacific’s steady oil and gas royalties, make its 0.7% dividend and meager 27% payout ratio even more appealing. 

TPL Dividends Paid (TTM) data by YCharts

Not including the occasional special dividends paid over the last few years (included in the chart), Texas Pacific has increased its scheduled payments annually over the previous 18 years while maintaining a low payout ratio.

Thanks to the state of the current oil industry, the company’s budding optionality, and its incredible dividend growth, Texas Pacific looks like a great candidate to double over the next five years.

Substantial dividend growth potential

While dividend yields of 0.4% and 0.7% may not catch the attention of most investors, five-year annualized dividend growth rates of 72% and 105% should.

Metric
Old Dominion
Texas Pacific
Dividend yield
0.4%
0.7%
Payout ratio
9%
27%
Consecutive years of dividend growth
Five years
18 years
Five-year annualized dividend growth rate
72%
105%

Data source: Ycharts. Dividend potential = dividend yield/payout ratio 

Furthermore, if you had purchased Old Dominion and Texas Pacific just five years ago, you would already be yielding 1.7% and 3.9%, respectively, on your original cost, thanks to each company’s incredible dividend growth rates. 

These growth rates, paired with each company’s dividend potential and robust underlying operations, give each stock the potential to double in five years and handsomely reward shareholders over the long term through rising dividends.

Josh Kohn-Lindquist has positions in Bitcoin and Texas Pacific Land Corporation. The Motley Fool has positions in and recommends Bitcoin and Old Dominion Freight Line. The Motley Fool recommends XPO Logistics. The Motley Fool has a disclosure policy.

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