Here Are 3 Exceptional Dividend Compounders To Supercharge Your Portfolio

Investment Strategy - Investors face the dilemma of choosing between aggressive growth stocks and dividend-paying stocks based on age, goals, and risk tolerance [1] - Younger investors often prefer no-dividend or low-yield stocks to maximize compounding, while older investors shift to higher-yielding stocks for retirement income [1] - Companies that reinvest earnings tax-free can benefit from compounding, but some investors prefer dividends for short-term gains and stability [1] - Dividend-paying companies are typically more mature, have predictable earnings, and are less volatile [1] ASML Holding NV - ASML is the third most valuable company in Europe and the top technology company in the region, specializing in semiconductor lithography [2][3] - The company's extreme ultraviolet (EUV) equipment is a market monopoly, priced between $100-200 million per machine, and essential for advanced chip production [3] - ASML's stock surged 14.8% YTD in 2024, driven by strong Q4 earnings, including the sale of 113 lithography systems, the highest in 10 quarters [3] - The company achieved 30% sales growth in 2023 despite a demand slump, with a 51.1% gross margin and €9.19 billion in Q4 bookings, signaling a cycle bottom [3] - ASML projects 45% EPS growth in 2025 and has consistently achieved an 18.1% annual EPS growth rate since 2012 [3] - The company is an aggressive dividend grower with a 5Y DGR of 30.72% and a 10Y DGR of 25.05%, though the current yield is only 0.65% [3] - ASML repurchased 6.8% of its outstanding shares in the last 5 years, a tax-efficient alternative to dividends [3] LVMH - LVMH is a global leader in the luxury sector, with a unique ownership structure where over 50% is owned by its founder and CEO, Bernard Arnault [6] - The company demonstrated resilience during economic instability, increasing product prices by nearly 17% during the COVID-19 pandemic [6] - LVMH's Louis Vuitton brand is valued at $26.3 billion, making it the second most recognized luxury brand globally [6] - The company reported record revenue of €86.2 billion in 2023, a 13% YoY organic growth, with €22.8 billion in profit from recurring operations, an 8% YoY increase [7] - Asia accounts for 38% of LVMH's sales, with Europe and the US each contributing 25%, though US sales faced pressure due to rising interest rates [9] - LVMH's EPS grew at an annual rate of 14.2% since 2002, accelerating to 16.8% over the last 10 years, with analysts forecasting a slight pullback in 2024-2025 [10] - The company has consistently grown its dividend at a 16.1% annual rate over the past 5 years, with a 2023 dividend of €13, up from €12 in 2022 [11] Visa Inc - Visa benefits from long-term tailwinds toward a cashless society, with a 90% increase in M2 supply over the past decade [13] - The company processed $5.83 trillion in US transactions in 2022, holding a 61.0% market share, with 70% of US adults holding at least one credit card [13] - Visa reported Q1 FY24 earnings of $2.41 EPS and $8.6 billion in revenue, an 8.9% YoY growth, driven by payments volume and cross-border transactions [13] - The company has a 5Y DGR of 16.27% and a 10Y DGR of 18.33%, with a recent 15.6% dividend raise in October 2024 [13] - Visa expects annual net revenue growth in the low double digits and reaffirmed FY24 EPS growth guidance in the low teens [14] - The company's EPS grew at an 18.9% annual rate since 2008, with an average of 15.5% since 2015, and is expected to grow at 13.5% going forward [14][15] Industry Trends - The luxury sector, led by companies like LVMH, demonstrates resilience during economic challenges, with high demand and pricing power [6][7] - The semiconductor industry, represented by ASML, is cyclical but historically shows significant growth following downturns [3] - The shift toward a cashless society, driven by companies like Visa, is accelerating, with high barriers to entry in the payment processing industry [13]