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2 dividend stocks I reckon could grow payouts for years to come!

Smart young brown businesswoman working from home on a laptop
Image source: Getty Images

Two dividend stocks I reckon could continue to boost their levels of return in the future are Spire Healthcare (LSE: SPI) and Halma (LSE: HLMA).

Here’s why I’d buy some shares if I had some investable cash.

Spire

Spire is a private healthcare business that runs 40 private hospitals and eight clinics. It also helps the NHS by providing services for it as the state-backed healthcare provider struggles with backlogs.

Over a 12-month period, the shares are down just 2%, from 248p at this time last year to current levels of 241p.

At present, Spire offers a dividend yield of just under 0.5%. I understand this isn’t the highest, and dividends are never guaranteed.

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However, I reckon Spire’s growing performance and presence could unlock future returns. Helping with the NHS’ backlog could be lucrative due to its well documented issues. Spire’s last set of results, and those before it, have shown good performance growth across all its segments, but specifically NHS revenues continue to rise.

The natural risks for me are if the government were to end outsourcing to private firms. This could hurt Spire’s performance and returns. For this to happen, a massive cash injection into the NHS would be required. Based on current economic and inflationary pressures, I don’t see this happening anytime soon.

I reckon Spire could continue its positive trajectory and performance growth which could see payouts grow. Its next results are due very soon and I’ll be keeping an eye out for them with interest.

Halma

The business develops and sells public safety and hazard prevention products. These include electronic alarm systems, visual warning systems, toxic gas and smoke detectors, and more.

Over a 12-month period, the shares are up 8%, from 2,193p at this time last year to current levels of 2,369p.

As a dividend stock, there’s a lot to like about Halma. It’s raised the annual payout by at least 5% for 44 years. Plus, it has delivered excellent sales and profit levels for the past 20 years, making it an excellent growth stock. I do understand that past performance isn’t a guarantee of the future.

A current dividend yield of 1% is minimal in the grand scheme of things. However, analysts reckon this should grow, although forecasts don’t always come to fruition.

From a bearish view, the shares look a tad expensive on a price-to-earnings ratio of 33. Any bad news or negative trading could send them tumbling.

Plus, Halma’s impressive growth has been driven by acquisitions. When acquisitions work out, they’re great and can boost the coffers. However, when they don’t, they’re costly to dispose of and can hurt sentiment and returns. This is something I’ll keep an eye on.

Rising demand for healthcare across the globe and increased regulation could help to support Halma’s growth. Its wide profile and presence should set it in good stead to continue this growth.

The post 2 dividend stocks I reckon could grow payouts for years to come! appeared first on The Motley Fool UK.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2024