The dividend stock club may soon be getting new members, according to Morgan Stanley. “A commitment to continued dividend payments sends a positive signal to the market, conveys management’s confidence in the business and opens up the stock to income-oriented investors,” analyst Todd Castagno wrote. He added that the dividend “sends a hopeful message.” future” while also providing stable income and attracting both passive and income investors. Alphabet and Meta Platforms are among the latest high-profile companies to launch dividends to reward shareholders. The search giant declared a quarterly dividend of 20 cents per share in April, while Meta Platforms authorized a 50-cent per share dividend in February. The moves bring the total number of “big seven” dividend-paying stocks to five, along with Nvidia, Microsoft and Apple. Castagno noted that companies across market capitalizations tended to outperform the market by 6.5% and 9.2% respectively in the six months and one year following an announcement. Broken down by industry, consumer staples, energy and communication services stocks tend to outperform, while materials stocks are the only sector to underperform after dividends. To find some potential dividend candidates, Morgan Stanley looked for stocks with market capitalizations above $35 billion, strong net cash positions and free cash flow yields above 3%. Here are some of the companies on the list: Several popular technology companies are on the list, including PayPal and Palo Alto Networks. Year to date, the shares are up 5% and 0.3%, respectively. Expedia Group has the most significant free cash flow yield of the group at 12.6%. Due to the slowdown in Vrbo’s business and the acceleration of B2C growth, the online travel company lowered its full-year guidance earlier this month. The company’s stock price has fallen 26% this year, and fell more than 16% in May. Newly-listed grocery delivery company Instacart is also among them. Shares have soared nearly 58% this year and are about 14% below its initial public offering opening price of $42. The company last year became one of the first high-profile IPOs after a roughly two-year drought in technology releases. Lululemon Athletica, Airbnb and Regeneron also made the list.
