In this article, I will turn the spotlight on three dividend dynamos that stand out due to their impressive track records. They have increased their dividend every year for at least 20 years in a row. Besides this exceptional achievement, however, they also exhibit huge upside potential, as their current valuations likely don’t mirror their underlying growth prospects. Their current prices appear so compelling, in fact, that I believe these names have a decent chance to triple by 2027.
Of course, such high-reward investments come with their share of risks, and it’s important to weigh these carefully. However, the strong performance history of these stocks confirms their ability to deliver over the long term, which kind of improves the margin of safety in their investment cases.
Matthews International Corporation (MATW)
The first high-growth dividend stock with the potential for tremendous upside on my list is Matthews International (NASDAQ:MATW). Not many investors are familiar with the name, but Matthews has a very long track record of success. The company’s roots go back to 1850. Since then, Matthews has built a strong reputation in the funeral industry.
One of its primary strengths is the recurring cash flows from its memorialization division, which includes cemetery and funeral home products. After all, this is as recession-proof as a business model can get. Also, Matthews’ brand solutions division has a strong foothold in the packaging and merchandising markets, which provides further stability and growth potential.
These qualities are reflected in Matthews’ excellent dividend growth record, with 29 years of consecutive annual increases. This is clear proof of the company’s ability to deliver over multiple economic cycles. In the meantime, the stock seems to be trading at a rather cheap valuation, signaling massive gain potential over the next few years. Shares are now trading at their 2001 levels, with Matthews’ forward price-to-earnings (P/E) ratio standing at just 9.6 times. Its organic growth and potential for a P/E multiple expansion could translate to explosive gains over the next few years.
Albemarle Corporation (ALB)
Another dividend dynamo with significant upside potential is Albemarle Corporation (NYSE:ALB). The company is a global leader in producing specialty chemicals, especially lithium, bromine, and catalysts. In recent years, Albemarle has established itself as a key player in the rapidly growing lithium market, which is being driven by the rising demand for electric vehicles (EVs).
Specifically, the company’s dominant position in the lithium production market translates to considerable growth potential as the world shifts towards cleaner energy solutions. Also, its diversified portfolio in bromine and catalysts ensures steady revenue streams during this transition period. To illustrate its explosive growth in recent years, Albemarle’s sales hit a record $9.62 billion last year, 188% higher than the $3.33 billion in sales in FY2021.
But besides its ongoing growth catalysts and recent performance, Albemarle boasts a long history of consistent growth. The company has raised its dividend for 29 successive years. Thus, having the opportunity to get the stock at a discount seems quite compelling in my view. After a prolonged decline in the past two years, the stock is not trading at a forward EV/EBITDA of just 10.9. Given the industry’s favorable outlook and Albemarle’s leading position, this valuation is likely to result in a long runway of share price gains ahead.
Artesian Resources Corporation (ARTNA)
The third and last dividend stock on my list offering tremendous growth potential and upside from its current price levels is Artesian Resources (NASDAQ:ARTNA). The company is a leading provider of water, wastewater and other related services, primarily operating in Delaware, Maryland and Pennsylvania. Its history goes all the way back to 1905, and Artesian has since built a long-standing reputation among its customers and investors alike.
What I love about Artesian is the stable and predictable revenue it generates as a regulated water utility. Water is an essential resource for households and businesses in the areas the company serves, so the business generates consistent cash flows. Moreover, the company’s strategic expansions and infrastructure investments position it well for future growth. The proven success of Artesian’s business model is reflected in its 31-year streak of consecutive annual dividend increases.
Higher interest rates have pushed utility stocks lower over the past couple of years, leading to Artesian shares now trading at their 2017 levels. This is despite the company continuing to grow at a stable pace in the meantime. With mid-single-digit revenue and earnings per share (EPS) growth likely to persist moving forward, along with the possibility of interest rate cuts allowing Artesian’s valuation to see its past premium levels, the stock has the potential to generate tremendous returns over the short-to-medium term.
At its current valuation, Artesian Resources seems cheaply priced, offering a compelling investment opportunity. The combination of stable dividend growth and the potential for significant appreciation makes ARTNA an excellent choice for investors looking for both income and growth.
On the date of publication, Nikolaos Sismanis did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nikolaos Sismanis is a professional research analyst with five years of experience in the field of equity research and financial modeling. Nikolaos has authored over 1,000 stock-related articles that focus on uncovering deep value opportunities, identifying growth stocks at reasonable valuations, and shining a spotlight on overlooked international equities.