These 3 Dividend Stocks Pay Growing Payouts. Here's Why Buybacks Could Be the Real Prize.
The Motley Fool ·
Key points
- Williams-Sonoma raised its quarterly dividend 15% to $0.76, while repurchasing $288 million of stock in the first half of the year and holding about $1.1 billion of remaining authorization; the stock trades around $258 and the company posted 6.2% comparable sales growth in Q2 with operating margins above 17%.
- Booking Holdings, which began paying a dividend in 2024, has raised it by 10% in 2025 and 9% in 2026, maintaining a payout ratio under 20%; in Q3 it bought back $2.1 billion of stock and has $12.4 billion of authorization remaining, equating to more than a tenth of the company at current prices, even as the stock has fallen about a third over the past year due to AI-related fears.
- Visa lifted its quarterly dividend 16% to $0.78 and, in fiscal 2026, returned $25.6 billion to shareholders via buybacks and dividends on $46 billion of revenue; the company has retired roughly a fifth of its shares over the past decade, supported by a business model with net margins above 50%, reducing the need to pay large cash yields while continually shrinking the share count.
- The underlying thesis is that a durable, growing dividend paired with sizable, well-timed buybacks can create value by steadily lowering the share count and boosting per-share metrics, provided buybacks are executed when shares are reasonably valued versus intrinsic worth.
- The piece notes that buybacks only create value when executed below or at intrinsic value and that not all programs succeed, implying the best outcomes come from a combination of disciplined dividends and ongoing repurchases rather than dividends alone.
Summary
A growing cohort of consumer and payments firms pairs modest, rising dividends with substantial buybacks to lift per-share value, arguing that buybacks can compound shareholder returns when undertaken below intrinsic value. Williams-Sonoma, Booking Holdings, and Visa exemplify this approach, using earnings to fund regular yet disciplined payouts while steadily shrinking share count. The narrative frames buybacks as the real engine behind long-term gains, even when dividend yields sit near modest levels. The outlook suggests continued value creation if stock prices remain conducive to buybacks and growth remains durable. Apple is cited as the archetype where buybacks amplified long-term ownership stakes, with dividends serving as a signal rather than the main driver.
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