There are many reasons investors love dividends. They provide assurance that a company is financially healthy enough to reward investors. Dividend stocks tend to perform better in market downturns and recessions. Dividends may offer tax advantages and help mitigate losses. And they offer total return (stock appreciation plus distributions), which is attractive for income-seeking investors. So a big dividend hike, like at Vertiv Holdings Co. (NYSE: VRT) last year, is sure to garner investor attention.
Vertiv’s annual dividend increased last year from $0.01 per share to $0.025, a 150% increase. However, the company switched to a quarterly payout this year, with a dividend of $0.025 in March. That puts it on track for a $0.10 annual dividend, another big hike for this year.
Of course, the company has a long way to go to be a Dividend Aristocrat, meaning that it has increased its payout every year for at least 25 years. However, it has paid out that initial penny per share yearly since it was founded in 2020.
Vertiv’s Prospects
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This dividend payer designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. Its offerings include power management products, switchgear and busbar products, thermal management products, integrated rack systems, modular solutions, and management systems that are integral to e-commerce, online banking, file sharing, video on-demand, energy storage, wireless communications, Internet of Things, online gaming and more.
As mentioned, the company was founded in 2020, and it is headquartered near Columbus, Ohio. Companies in the same industry include Powell Industries Inc. (NASDAQ: POWL) and Preformed Line Products Co. (NASDAQ: PLPC). (See two stocks that are quietly capitalizing on the AI boom.)
Vertiv joined the Nvidia Partnership Network last month, cementing its place as an AI growth stock. Earlier, the company released optimistic guidance with its quarterly results, despite disappointing sales numbers. And late last year, Vertiv acquired a former partner.
Vertiv’s share price increased 251.6% last year and is about 78% higher so far this year. It just hit an all-time high of $88.69. That is well above the consensus price target. However, as mentioned above, the high price target is up at $100, which represents a gain of more than 18% in the next 12 months. All but one of the 12 analysts that cover the stock recommend shares.
This stock is a top AI pick of billionaire investors Leon Cooperman, Stan Druckenmiller, and Paul Tudor Jones, as well as TV personality Jim Cramer.
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