5 Dividend GROWTH Stocks BlackRock is Buying Right Now! 🚨

0:00 Hey, welcome back subscribers to my world of stocks. My name is Ala and hey, also welcome back to our weekend institutional buyer series, favorite series of the channel where every weekend we take a look at big stocks being purchased by some of the largest investors in the world who of course hold a ton of influence over the stock market. And for this week's episode, well, we're actually going to be looking at a giant that perhaps hold the most influence of all in the notorious Black Rockck. Now, we did actually talk about Black Rockck a little while ago, but, I was digging through their most recent SEC filings, and I actually discovered that Black Rockck had spent billions of dollars on five particular stocks that happen to carry very small dividends, which kind of fly under the radar for most investors, but that happen to carry huge growth metrics on them, too, like a tiny payout ratio, meaning they have plenty of room to grow larger. They all carry double-digit growth rates, meaning they are actively growing out these dividends every single year by large increases. And they also carry double-digit growth histories, meaning they've already been doing exactly that for at least a decade straight, if not much longer. So, it really seems like Black Rockck is chasing two specific things here from these names. Number one, big capital appreciation in the stock price itself because these are very high growth businesses with huge future potential, large dominance in their respective fields. And number two, perhaps they're trying to also compound those returns over time with growing dividend payouts. They usually get ignored because of the smaller yields, but you know, say 10 years from now, these could actually grow into meaningful contributors. In fact, I'm going to show you with each of these what your dividend yield would actually be if you had purchased these stocks many years ago. How much what what actual dividend would you be getting? And that can kind of illustrate for us the potential of how you could actually have some very large dividend yields in the future if you were invested in these stocks and they continue that trajectory. So, we're going to break down all of this for you today in this video. And of course, I'm going to be sharing my own opinion on each one of these stocks. I'll even rank them from best to worst, too, based on current share prices for the long term.

2:26 So, it's going to be a ton of fun. We always love doing these. Hit hit that like button. Hit the like button, too. Lets me know you want more videos like this in the future. Let's just go ahead and jump straight into it. Okay, so kicking things off here with purchase number one. We're going to be traveling over to the semiconductor space with a behind-the-scenes giants that quietly dominates the AI hardware supply chain. Yet, I find that they rarely ever get talked about despite handing investors one of the fastest growing dividends in tech as well. And that is the chip inspection and metrology king, KLA Corporation, ticker symbol KLAC. Now, this was actually by far the smallest purchase by Black Rockck, worth $54 million in new shares added in the past quarter, while the others were actually billions in new purchases. So, you'll we'll have much larger purchases here in just a second. However, the stake does balloon all the way up to 38 billion in total just for KLA. as this has really been one of Black Rockck's favorite tech stocks to really be loading up on throughout the years.

3:30 Now, this latest purchase does come at an opportune time, though, as KLA has been on fire over the past decade before suddenly taking a brutal hit more recently where it lost about 40% of its value from the top, which was really triggered by a wave of market panic with investors getting nervous about like a cyclical slowdown in chip equipment as well as I'd say ongoing fears around US export restrictions specifically into China and even Wall Street panicking over how much tech giants are spending upfront for the whole AI boom. But here's likely why Black Rockck continues to pour so much money into this stock here on the dip regardless. Now, for one, KLA's competitive mode is incredibly strong. See, when people think of the AI boom, they usually think of Nvidia designing the GPUs or TSMC manufacturing them. But as these advanced AI processors get packed with tens of billions of microscopic transistors, well, building them without any microscopic defects can become nearly impossible. If a foundry has even a tiny speck of dust or a microscopic flaw on a wafer, well, they could end up throwing away millions of dollars and ruined silicon. Well, that's where KLA comes in. making the ultra precise optical and electron beam inspection machines that scan wafers at the nanometer level to catch any defects before chips ever get packaged. In fact, KLA controls more than half of that entire global semiconductor process control market. And so, foundaries like TSMC simply can't manufacture cutting edge AI chips at scale without KA's tools. It's an essential toll booth for the entire semiconductor industry if you want to think of it that way. And that dominant position has really translated directly into some unbelievable cash flow numbers. In the past year, for example, KLA generated nearly 13.6 billion in sales, and it was up almost 12% year-over-year, while close to 5 billion of that got converted directly into pure net income profit. And even more importantly, over the coming year too, analysts project sales to accelerate even further with over 33% growth on the top line, while net income skyrockets past 10 billion in the next 2 years, too, breaking new record highs.

5:49 And all of these rising financials are exactly the reason why they're able to grow their dividend by so much. Now, on the surface, the starting dividend yield is pretty small at only around half a percent. But with such a tiny payout ratio of only around 20%, there's going to be plenty of room to continue growing it over time, which is exactly what we've seen so far from them with nearly an 18% growth rate on over 16 years of consecutive increases. Now, let me just pull up the percentage calculator here to show you what your actual yield would be if you had purchased this stock many years ago. So about 10 years ago, this is a stock that was trading for less than $7 a share. Well, if we take the 92 cents that they currently pay out per share in dividends, that would translate over to a 13 about a 13.5% dividend yield. Meaning if you bought this stock 10 years ago, right now you would be collecting over 13% of a dividend every single year going forward. on top of how much the stock price itself has soared. That right there is the insane power of dividend growth investors. That's why investors look for stocks that, you know, even if they may not have a high yield today, just the fact that they're growing it by so much a and if they still have room to continue growing it in the future, it can quickly kind of snowball into a much higher yield in the future. And then you benefit from a growing stock price because again, the business is growing itself too. Like with a dividend growth stock, you typically want a business that is growing at high rates too. Well, that's exactly what KLA is doing. It's a very high growth business as are all the other stocks we're going to talk about today. But then you add to that a growing dividend and then you're talking about insane returns on your investment.

7:41 Well, for those reasons, yeah, I think this is a very solid stock here to be investing in longterm. I think it's a fantastic future tech play just on its own. but then you add on that, you know, nice little growing dividend as a bonus and yeah, it's looking very strong. But there are a couple risks I would say that you should at least be aware of. for one, TSMC makes up a very large chunk of their business. So, you know, if their foundaries suddenly tap the brakes at all really, KLA would greatly feel that. now, I'm not saying that that's going to happen anytime soon cuz I do think that there's like insane demand for AI. But you know the other concern is that even after the dip in price that we've seen in KLA the valuation is still like pretty pricey in this name it trades at around 37% higher than the sector on even the most forgiving PEG basis which does factor in growth. So for those reasons you know I think I'll rank them around the middle for now at number three until we see the other options on the list. But again, I can definitely understand why Black Rockck is buying the dip here on this premier, you know, kind of pick and shovel tech play as probably a dividend growth stock. Okay, moving on to purchase number two. we have one of the most popular stocks in the market, yet most investors don't even realize that they also pay a fast growing dividend too.

9:06 And that is the king of the AI revolution, Nvidia. ticker symbol NVDA, which Black Rockck poured an unbelievable 3.1 billion more dollars into last quarter. Now, let's just address the elephant in the room right away. If you ask most investors why they own Nvidia, yeah, 99% of them are basically going to tell you that it's for just pure capital appreciation, the stock price itself. hyperrowth in the business for sure, and just the fact that they are so dominant and that the stock just continues to surge by, you know, crazy amounts to record highs.

9:43 That's really what drives most of the hype and FOMO into this stock. But virtually nobody talks about or or even like buys Nvidia stock thinking, "Hey, I'm building a dividend portfolio with this one." It just doesn't really get brought up much. And the reason is again because the yield is so small currently at only around half a percent. Where it's paying out exactly $1 for every share that you own annually. But this is where the power of dividend growth investing comes in because Nvidia's payout ratio is also sitting at an astonishingly low less than 4% of their profits. Now think about that for a second. Traditional dividend blue chips often pay out like 50% 60% or even 70% or more of their profits just to even maintain their dividend. But because Nvidia's is so low, they're sometimes able to grow it by insane rates higher. In fact, they recently did exactly that, hiking their quarterly payout from 1 cent up to 25 cents, which is a 25 times increase, you know, seemingly out of nowhere. Now, again, it's easy to do that when it's already so small, but I would argue that even here, it's still extremely small on that tiny payout ratio, and it could very easily be double, tripled, or even more in the coming years. Honestly, with how fast their cash flows are growing, they could even like 5x this dividend payout without even breaking a sweat.

11:09 Now, that really comes down to their underlying business that continues to just push ahead over the competition is doing incredibly well. But before we touch on that, let me just go back to the percentage calculator to show you what kind of dividend you'd be collecting if you had purchased this stock 10 years ago. Now, 10 years ago, the stock was trading for less than $2 a share. So, you do that $1 dividend payment now that they're paying per share. yeah, you would end up with a dividend yield of more than 50% a 56% dividend yield. It is absolutely insane. So again, just the power of dividend growth investing. Now with Nvidia it's a little tricky cuz yeah maybe you know 10 years ago you absolutely would not expect that to happen but the point is you know that just over time you give it years and if and if you you know if you feel that this is a company that will grow their dividend over time which I think it's like definitely a fair case to make for Nvidia that the fact that they're already paying one the fact that their payout ratio is like insanely tiny the fact they can easily afford it you can definitely make the case that they're going to be growing it in in the future and therefore it makes for a pretty solid dividend growth stock. Now again that really comes down to the underlying business where they just continue to like dominate over the competition. I see Wall Street used to view Nvidia as just a gaming and AI graphics company. But today CEO Jensen Hang and his team are building out entire computing factories where their CUDA software ecosystem locks customers in so deep that switching over to a competitor is typically out of the question now. And with their new Vera Vera Rubin platform, Nvidia isn't just relying on GPUs anymore either, but they're even rolling out now like f their first like standalone CPUs too in order to power the next wave of AI agents. And that's going to be tapping directly into like a 200, you know, multiundred billion dollar market where they already expect 20 billion in new sales just right out the gate from that alone. And so all of that dominance is translating into an ocean of pure cash. Over the past year, revenue and net income have practically doubled with free cash flow forecasted by analysts to shockingly climb all the way up to more than 400 billion in the coming years. I mean, these are just unheard of numbers that we're talking about here. And it's why despite the stock trading high in price, the actual underlying valuation when you compare it to the soaring profits, it's actually more than 60% cheaper than the sector median, if you can believe it. So, Nvidia, you know, it was already one of my absolute favorite stocks of the future. And now with their dividend potentially soaring even more in the future, this might even be a bit of a slept on dividend growth play for long-term investors, too. So, yeah, they easily go higher on our rankings here. I'm going to put them at number two for now. Okay. I will say though that if there was any stock that could give Nvidia a challenge, it could definitely be this next one here at purchase number three. And that is the software and cloud titan Microsoft ticker symbol MSFT which black rockck poured over 5.2 billion more dollars into last quarter making it one of their absolute largest holdings which I am very happy to see myself because as you guys know Microsoft along with Nvidia are also you know two of my largest holdings as well. Now, just like Nvidia, if you look at Microsoft through the lens of like a traditional dividend screener, you'd probably scroll right past it as this, soaring stock price has left their dividend yield at today's prices just a bit under 1% which is a little underwhelming. However, something that most investors don't even realize about Microsoft is that this is quietly one of the largest dividend payers in the entire world by raw cash. In fact, when you look at total cash returned, Microsoft pays out tens of billions of dollars in dividends every single year.

15:24 And it's even more than almost any other company in the entire S&P 500. I think it actually might be the largest. Well, the reason for it is that Microsoft's growth profile is as elite as it comes where they're generating so much cash from Windows, you know, Office, Azure, all the all the new AI offerings that they're that they have now that they're rolling out. they're generating so much from all of that that they only need to use about a fifth of their earnings to even cover those gigantic payouts while still leaving mountains of capital to pour right back into, you know, AI data centers and even to buy back billions of their own stock, too.

16:02 But because of it all, they've been able to grow their payouts at a double-digit rate while also doing that consistently for over two decades in a row. Now, I'm only going to look at one decade ago, not two decades ago, but just one decade ago. the stock was trading for like around $55 a share. Well, if you look at today's dividend payout, it's around $3.92. Yeah, you would end up with a dividend yield of more than 7%. So, you know, somebody who bought Microsoft stock 10 years ago, which is not that crazy to think about. You know, Microsoft was already a very solid stock to be investing in. anybody who bought it back then, and I was certainly buying it, too. I've been buying it ever since, but I've been buying it for a long time.

16:49 But anybody who, you know, has a cost basis from 10 years ago, they're collecting over a 7% dividend yield, at least on those investments. So, again, just the power of dividend growth investing, it's it's really wild. Now, if we look at the company here, these dividends are from Microsoft. again, they're going to be growing much larger in the future. That's just very obvious by looking at the metrics. And the reason is because, you know, this is a company that does hundreds of billions of dollars in sales and profits every single year. And yet, their growth rates for the next 3 years are actually projected to rise even higher. Like, they're accelerating all the way up to over 20% growth. This is mindblowing for their size. And I would honestly rank Microsoft number one on our rankings list if it wasn't for just the sheer difference in valuation compared to Nvidia. Now a little while ago Microsoft stock was trading much lower and I was like screaming at you guys, hey I'm buying a ton of this stock. It is at a great valuation. I was getting comments like you know that just were not with me and just a lot. You know some people were for sure but some people were also like no like Microsoft's going to keep going down all this stuff. Well sure enough Microsoft rebounded. and because of that now, yeah, the valuation is not nearly as attractive, but you know, Nvidia's is much cheaper.

18:10 Microsoft is still, you know, pretty good if you just look at like on a gap basis. They're actually still, if you can believe it, a little cheaper on a gap PE basis, but when specifically looking at a PEG basis, Nvidia is much cheaper on on that metric. And since this video is kind of tailored more towards growth, yeah, I think Nvidia does kind of edge Microsoft in that department. So, we will, bump Nvidia up to number one. And so, we'll put Microsoft just barely under them at number two. I I could understand a case for either one of them to be at number one. But I think again, just cuz this video is tailored towards growth, Nvidia, you know, that could be kind of the differentiator to kind of give them the edge. Okay. Now, we got two more stocks to run through here. but coming in at purchase number four, and both of these are also going to be very hard to rank on our list, because they're all heavyweights. But yeah, this one here is, another semiconductor play. It's one that Wall Street though completely, is obsessed over for their growth in AI, but does again, like the others, doesn't get talked about nearly enough for the fact that they actually pay a growing dividend, too.

19:23 And that stock is the custom silicon and enterprise infrastructure giant Broadcom, ticker symbol AVGO, which Black Rockck poured another $4.2 billion into last quarter, bringing their total stake in the company now to around 150 billion in total. By the way, just like the others, we're talking about an insanely dominant and onfire business here. And it's one that just dominates the like custom chips market, developing them for tech giants, other tech giants like Google, Meta, OpenAI, Anthropic, and more. And once those hyperscalers build, you know, multibillion dollar data centers around Broadcom's custom silicon, the switching costs are very high. And it just leads to a ton of recurring revenue for them, that even includes, you know, a lot of software services revenue, a lot of stuff in AI networking, enterprise software, cyber security, that's big too for them, and and a lot more. So Broadcom is like pretty well diversified within their own specific like niche as well. Now last quarter for example, total revenue climbed 86% year-over-year while operating income actually soared even more 92% growth year-over-year while free cash flow was nearly half of their topline as well. So re very incredible financial strong margins and that's really just allowed them to pay a growing dividend as well that in my opinion is heavily slept on too. In fact when Broadcom first initiated its dividend back in I think it was like 2010 under Avago.

20:58 it was it was paying out what equates to less than a single penny per share after stock splits when when you adjust for that. but today that payout is up to $260 annually, meaning that their dividend has grown more than 90fold over the past 15 years. So, the only reason that the yield is less than 1% today is simply because the stock price has skyrocketed too. But, you know, early investors have been making absolute bank on all of those dividends. which we can just go back to our percentage calculator here again to see what that might look like even just for just again just the past 10 years we're like shrinking the size we could go even further and it would be even much higher but for Broadcom back you know 10 years ago this was like a $17 stock $2.60 60 cents of a dividend payout, you're talking about now a yield of more than 15% for investors that just bought the stock 10 years ago, you know, so just back in like 2016. You know, it's not it doesn't really seem like that long ago, does it? now that dividend has been, you know, continues to get to be grown. And it's not only because, you know, the payout ratio is so small at just 26%. But analysts are also projecting their free cash flow to nearly triple in size over the next couple years thanks to all the surging demand from AI. So, you know, if management remains committed to that dividend like they have in the past, you know, we can clearly see that and I don't see any reason why they wouldn't just continue that in the future, then yeah, this could easily turn into a high-flying dividend growth stock as well. I think the numbers prove that.

22:43 And even the valuation is pretty good here too. Thanks to a recent dip in price coupled with the explosive growth on the bottom line, their PEG ratio is over 50% lower than the sector median, which is pretty crazy. Now, I don't think I can quite rank them above Nvidia or Microsoft just because of the sheer size and dominance that those hold. but this is like as tight of a three-way race as you you can get up here. but Broadcom will go just, you know, barely squeezing behind them, down into the number three slot on our rankings. And I and I'll have to push KLA down at number four, because of it. Okay. And finally here, that brings us now to our fifth and final purchase of the list.

23:24 And for this one, we're we're going to be going into the healthc care space, but we've been talking a a lot about tech already on this list. There's actually a lot of tech in this one, too. So, not a whole not too big of a change, but let's jump into this one. Another big dividend growth play as well, and that is the pharmaceutical powerhouse Eli Liy, ticker symbol LLY, which Black Rockck scooped up another 1.3 billion worth last quarter. That's bringing their total stake now to over 80 billion as well. Now, just like the others, this is another high-flyier when it comes to the stock price, consistently breaking record highs on it, which does unfortunately drive that dividend yield down all the way to less than 1% based on today's current share price. But where Lily lacks in yield, they absolutely make up for with explosive growth everywhere else. Now, first off, both the dividend growth rate and growth history sit comfortably in the double digits. But most important, their payout ratio is also tiny at only around 20%. Which is crucial and honestly pretty rare for a pharma giant like this to have because it not only enables them to keep growing the dividend at high rates, but it also leaves them a mountain of cash flow to be able to pour into, you know, very necessary things that a pharma giant biotech like this needs. Things like clinical trials, factory expansions, and of course, strategic acquisitions. All of which is exactly what Lily has been executing with almost perfection in recent years. We'll touch on that here in just a second. But first, let me just show you the percentage calculator one last time.

25:03 This time for Lily, if you bought the stock 10 years ago, it was sitting at around $67 a share. when you calculate today's dividend payouts per share that you could have got for 67 bucks, you'd be getting almost $7 in dividend payouts per share. And that translates to over a 10% yield. Now, can you imagine holding Eli Lily stock today? This is one of the biggest growth beasts in pharma, right? Like every pharma investor wants to have Lily for the insane growth that they have. Can you imagine them also paying out a dividend that yields over 10%. Now normally to get that you got to go with a business that has been struggling greatly like Fizer something that has declined from you know the pandemic highs you know a beaten down stock like that that where the stock price has cratered by a huge amount. normally to get a high dividend yield in pharma you need you need one of those type of stocks. You absolutely would never expect to see it from a company like Ela Lily but again that is the power of dividend growth investing. You just got to get in early on and then invest long term. You know, so many man I I shouldn't go into a rant, but it's just like so many people like just bag on long-term investing and they talk about like, oh, it's all about short-term trading, short-term trading, and they bag on long-term investing.

26:25 This is the power of long-term investing. Can you imagine? Like Eli Lily has performed so strong in stock price. It's literally like the biggest you know, pharma giant now in terms of market cap because the stock price has soared by so much. And yet, you could also get a gigantic dividend yield on it, too. But again, you'd have to be a long-term investor for that. You'd have to be. It's the only way. It's just kind of crazy. Okay, rant over. I won't go I won't rant too much, guys. I'm just, you know me. Like, you know me.

26:54 I'm a big advocate for long-term investing, and I much much prefer that over short-term trading. But, but to each their own. No, no judgment here. We welcome all viewers. No judgment. Okay. So, with that said, again, Eli Liy has been, executing those strategies that you typically want in pharma giants to almost perfection. their injectable blockbuster, Zepbound, Mjaro for weight loss, diabetes, they've turned into absolute cash cows for them, generating many billions of dollars in sales while growing 46% and 91% respectively last quarter alone.

27:30 Combined, they've helped Lily capture over 60% of that entire market. They're also expanding with new versions that are showing very strong results. they've made several new acquisitions some of which have AI power powered into them, powered into their businesses. They've announced you you know AI partnerships and they even completed their brand new supercomput called Lily Pod which is now considered the most powerful biotech supercomputer in the entire world and is powered by over a thousand nextG Blackwell GPUs from Nvidia. and that's going to be, you know, greatly powering their pipeline and their drug discovery platform and all that kind of stuff. So, there's a lot to look forward to even in the future, too. And because of it all, analysts are projecting insane growth to to really continue for them on both the top and bottom line, which are already like industryleading for their massive size. I mean, you want to talk about growth, Lily checks all the boxes, and it fits perfectly for, you know, what a dividend growth investor would be looking for in that kind of category.

28:32 And even the stock's valuation benefits from all that growth too cuz it's driven their PEG ratio to even lower levels than the sector if you can believe it. Like the most the most wanted biotech, you know, pharma stock on the market is actually lower than the sector because of the the insane growth and that's factored into the PEG. Now, I do like Lily a lot and I would even give them the edge over KLA, but I still can't quite rank them as high as like Nvidia, Microsoft or Broadcom, who I just trust a bit more for myself and they are in my portfolio. But, hey, what a group of stocks here. so many great options.

29:14 This was a ton of fun. Let me know if you'd want me to look at any other like dividend growth stocks, make comparisons. Let me know what those are. or if you want me to hunt down some for you, let me know that as well. I'd be happy to do that. I think these stocks are fantastic like long-term options both in, you know, I I would say just for stock price appreciation alone, but now also as being like kind of slept on dividend growth plays too.

29:40 and it'd be very interesting to see where they are like a decade from now. And man, can you imagine if like a decade from now they're even they're like so much higher and then we look back on it and we're like man like we could have bought them for today's prices. I don't know. It's always fun to do that. cuz I remember like in 2016 like you know there were so many great stocks and I was buying a ton of stocks and a lot of people just thought like stock prices are going to go much lower from here. Nobody want, you know, there's been so every year, you know, people make excuses for not investing into stocks and yet long-term they always perform so insanely well and then like people just are always like kicking themselves for not having purchased many years back, right? But I don't know.

30:24 I guess hindsight is always 2020 anyway. Okay, I don't want to ramble on, but these were my final rankings. Do you agree with them? I'd love to hear your thoughts. Would you make any changes to my rankings? and yeah, let me know if there's any other type of videos you guys want me to make in the future. I hope you enjoyed this one, though. And if you do want to support the channel, again, you can always subscribe. That helps a lot. And if you do want to go above and beyond, you can support me on Patreon. Link is down below. You get so many cool perks. For just five bucks a month, early commercial free access to videos, our community Discord, hang out with me and other like-minded investors, my daily stock trade. I post a new stock purchase every single day.

31:02 you get all of that for just five bucks. I think it's a great deal. and it helps me out a lot. So, thank you so much to all of our members. I couldn't do this without you. So, thank you so much. And yeah, I hope you're all having a great weekend, staying safe out there, doing well in the market. I'll try my best to help you out wherever I can. And I'll catch you guys in the next video. All right, my friends. I'll catch you next time. Take care. Bye-bye.

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