Kevin Wallen
Publisher
Contrarian Outlook


Dividend Magnet Stock #1

378% Dividend Growth Trading at a Reset Valuation

Our first stock is a global payment powerhouse that’s almost never cheap.

But recent headlines out of Washington and the threat of increased regulation sent investors racing for the exits.

The stock shed 12%, but fears were overblown and unfounded, based on a complete misunderstanding of its business model.

That’s too bad for sellers—but it’s great for us. We now have a chance to buy at a rare bargain.

As I write, this company is producing:

  • $30+ billion in annual revenue
  • Roughly $19 billion in free cash flow
  • Operating margins consistently above 60%

The firm processes trillions of dollars in annual payment volume across more than 200 countries—collecting a slice of nearly every transaction that moves across its network.

It’s a dominant financial platform that has raised its payout annually for the past 17 straight years.

And the share price is spring-loaded to catch up:

Share Price Lags Payout Growth

The “Dividend Magnet” effect is clear here. Every time the payout rises—most recently by 13.6% in December—investors bid up the stock in response.

You can also see that anyone who bought “bad weather moments” like this (times when the share price fell behind its dividend growth, in other words) did very well indeed.

My research indicates this stock has plenty of upside, and management knows it too.

In 2025, they dropped $18.2 billion into share buybacks, and they’ve repurchased 18% of the company’s float over the last 10 years.

As we discussed earlier, buybacks enhance earnings per share (by extension supporting the share price) and boost the dividend, leaving fewer shares on which they have to pay out.

Steady Buybacks Drive Total Returns

Finally, its strong balance sheet, with $23.2 billion in cash and investments, just a tad shy of its $25.9 billion debt, gives it a strong cushion here.

So on a net-net basis, it’s nearly debt-free. That gives it plenty of room to weather any storm and keep its dividends (and buybacks) growing.

The time to buy is now, before the crowd figures out the true value of this payout-popping powerhouse.

Dividend Magnet Stock #2

A Backdoor “Dividend Magnet” with a 154% Total Return

Our next pick is the smart “second level” AI play that vanilla investors don’t see from their first-story perches.

Wall Street chases NVIDIA and Microsoft? Fine.

We contrarians will gladly take the toll collector that wires their data centers to the grid!

Every new server farm means more substations, more high-voltage lines—and more returns for shareholders.

Every billion dollars plowed into infrastructure is a billion-dollar asset that flows cash for decades.

This firm plans a record $56 billion capital investment program over the next five years. More than half of this spend will boost transmission and distribution, connecting data centers to AI campuses.

What does $56 billion really buy?

Hundreds of new substations.

Thousands of miles of upgraded high-voltage lines.

Fleets of new transformers to handle surging power demand.

The company’s queue already includes projects for tech giants like Microsoft and Amazon. Even if just half of the 186 GW in requests come to life, it’s still twice today’s peak demand.

And here’s where the dividend magnet kicks in.

More infrastructure means a larger base rate.

A larger asset base means higher earnings.

Higher earnings fund rising dividends!

That’s how the company has been able to raise its payout for 20 straight years—averaging roughly 9% annual increases for each of the last 5 years.

The payout today is 84% larger than a decade ago. No wonder the stock’s up 82% over the same period!

Payout-Powered Price Gains

Including dividends paid, shareholders earned 154% total returns over the past decade.

Not by speculating on chip cycles.

But by owning the infrastructure that will power them.

And with electricity demand soaring in its own backyard, this dividend has years to run.

Dividend Magnet Stock #3

An AI-Powered Dividend That’s Soared 197%

Insurers aren’t the first companies that come to mind when we think about AI. But Pick No. 3’s clever use of the tech speeds up its business.

And faster claims, lower costs and happier customers fuel its already-fast payout growth, with a dividend that’s jumped 197% over the last decade. Sweet!

Pick No. 3’s Triple-Digit Dividend Growth

New technology is turning around claims faster than ever before, with AI-powered systems reading medical records, verifying coverage and greenlighting payouts in as little as 30 minutes. That’s better service for the customer and a big win for retention.

Management returns every dollar of savings through that surging dividend and buybacks, which have slashed the company’s share count by an outstanding 37%.

It doesn’t get more shareholder friendly than that!

Then there’s growth. AI-powered analytics help this firm’s sales team focus on the most promising prospects, and take market share from slower-moving competitors.

All of this is a very nice setup for another big payout hike. Let’s get in now, before it’s announced.