Summary:
1. Long-term dividend growth is more important than a high initial dividend yield when looking for the best dividend stocks to own.
2. Nelnet is an under-the-radar stock with steady dividend growth potential, making it a safe investment for dividend investors.
3. Nelnet’s evolving financials business, hidden assets, and commitment to dividend growth make it an ultimate dividend stock to buy and hold.
Article:
When it comes to investing in dividend stocks for the long term, focusing on dividend growth rather than high initial yields can be a smart strategy. Stocks with growing earnings power, such as Nelnet (NNI), can offer more value over time. Despite currently yielding less than 1%, Nelnet is positioned as a perfect dividend stock that investors can buy and hold without worrying about selling in the future.
Nelnet, known for its role in student loan financing, has been adapting its business model to navigate changes in the industry. With the Affordable Care Act restricting private companies from financing undergraduate student loans, Nelnet has shifted its focus to other lending operations. The company expects steady cash flow from its existing student loan portfolio, which will support investments in other businesses and contribute to its growing dividend.
In addition to its lending operations, Nelnet also has a strong presence in the education sector through its educational software and payments processing division. This division generates significant revenue and operating income, providing a steady cash flow that can be used to support dividend growth. Furthermore, Nelnet’s ownership stake in Hudl, a private start-up dominating the sports film and coaching software sector, adds another layer of value to the company.
Nelnet’s commitment to enhancing shareholder value is evident through its share repurchases and consistent dividend growth. By reducing the number of shares outstanding and increasing EPS, Nelnet has been able to create value for its shareholders over the years. With a history of annual dividend growth and a solid buyback program, Nelnet is poised to continue delivering value to investors in the form of a growing dividend.
In conclusion, Nelnet stands out as a sneaky dividend stock that investors can trust for long-term growth. Its evolving business model, hidden assets, and focus on dividend growth make it an attractive investment option for those looking to build a reliable dividend portfolio. By considering the potential of Nelnet as an ultimate dividend growth stock, investors can make informed decisions to secure their financial future.
