Because of the power of compounding returns, stock market investing is mainly about betting on gains that are far off in the future. Most of your returns will show up years after your initial stock purchase, notwithstanding the potential for quick short-term growth from time to time.
Still, there's room for immediate payouts as well. Dividend stocks offer a mix of long-term growth and current income that many investors find irresistible. And that's true whether you decide to take the dividend payment in cash or automatically reinvest it in the stock to amplify returns.
So let's look at a few stocks that look attractive here in early December and are scheduled to pay a cash dividend this month. Read on for some good reasons to buy Home Depot(NYSE:HD), Nvidia(NASDAQ:NVDA), and Vanguard Total Stock Market ETF(NYSEMKT:VTI).
1. Home Depot
Home Depot could be one of those investing gems hiding in plain sight. Sure, the industry leader is a well-known commodity on Wall Street. It dominates the home improvement category thanks to its massive store footprint and a huge online business.
But don't let its established position scare you off from the stock. Home Depot is still in growth mode, with sales rising 6% in the most recent quarter after having soared 24% a year earlier. The chain is benefiting not only from higher consumer spending around the home, but also from a long streak of capital initiatives from its highly efficient management team.
Those successes likely mean you haven't missed the boat on this stock, and in mid-December shareholders will get an extra bonus as Home Depot pays out its 139th consecutive quarterly cash dividend, this time of $1.65 per share.
2. Nvidia
Let's get this out of the way early: You're likely not interested in Nvidia stock for its dividend. The chipmaker's shares have soared this year on excitement about its foundational role in areas like gaming, cryptocurrency, artificial intelligence (AI), and the metaverse. The roughly $100 million that it will pay out in dividends in late December represents a tiny fraction of investors' returns this year.
Yet the stock is earning that premium. Nvidiaadded $2.5 billion, or 50%, to its revenue base in the third quarter. Profitability expanded too, even as it poured cash into research and development aimed at extending its innovation lead.
CEO Jensen Huang said in mid-November that there was no shortage of growth avenues ahead. "Demand for Nvidia AI is surging," Huang explained. When highlighting the company's offerings that support the metaverse, he said, "This is the tip of the iceberg of what's to come."
3. Vanguard Total Stock Market ETF
While an exchange-traded fund (ETF) is more of a basket of stocks, the Vanguard Total Stock Market ETF still deserves a prime spot on your watch list. Buying this stock gives you instant diversification. And with one purchase, you can achieve what most Wall Street pros fail to do over the long term: Match the broader market's return.
The Vanguard Total Stock Market ETF charges investors next to nothing, with its expense ratio sitting at below 0.05%. It also delivers a solid yield that today is roughly 1.2%. The ETF pays regular quarterly dividends, with its largest normally hitting shareholders' accounts in late December.
Steady money
There's no telling whether the stock market will climb in the year's final month. However, owning a few dividend-paying stocks like these, an investor can be sure to see steady cash payments through any type of market.