3 Under-the-Radar Dividend Stocks That Could Be Future Superstars
Motley Fool
Keith Speights, The Motley Fool
Motley FoolJanuary 7, 2018
In 1978, a young sophomore at Emsley A. Laney High School didn't make the varsity basketball team because he was too short. Who was this young man? Michael Jordan -- who went on to become one of the greatest superstars in the history of basketball. (By the way, he also grew in height by eight inches over the next few years.)
The reality is that future superstars can sometimes fly under the radar. Their potential greatness isn't obvious at first. What's applicable in sports is also true for investing. Could there be some dividend stocks that aren't so hot right now but have the potential to blossom? I think Comerica (NYSE: CMA), Imperial Oil (NYSEMKT: IMO), and InterDigital (NASDAQ: IDCC) make the team.
InterDigital [SNIP]
InterDigital is another stock with a good but not spectacular dividend. Its yield currently stands at 1.84%. But that doesn't tell the entire story for the mobile technology company.
Over the last five years, InterDigital has increased its dividend by a whopping 250%. And I suspect more dividend hikes will be on the way. The company's payout ratio is a very low 12%. My colleague Brian Feroldi picked InterDigital back in June as an attractive income stock whose dividend could double. I think Brian was right on target.
In addition to InterDigital's low payout ratio, the company has pretty good growth opportunities. Analysts estimate that InterDigital will be able to increase its earnings by 27% annually over the next five years.
There are two reasons to have confidence that InterDigital will be able to deliver that kind of growth. The company is already an established leader in wireless networks, holding close to 10% of key patents and patent applications essential for LTE (long term evolution) technology and standing out as a pioneer in 5G network development. InterDigital also ranks among the top companies in Internet of Things technology.
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