The metaverse is coming. We’re talking about immersive virtual 3D worlds where tech and society intersect… where the real world and the virtual world are melded.

While we don’t yet know exactly what this will look like, it’s poised to become a huge part of everyday life.

Bill Gates recently came out and said that work meetings will be in the metaverse within 2-3 years. So this isn’t some far-fetched concept that’s 20 years out. It’s nearly upon us.

Now, I’m a long-term dividend growth investor. I like to invest in high-quality companies with stable, secular growth that pay out reliable, rising dividends.

I like proven consistency and visibility. Jumping on unproven and unprofitable trends is not my thing.

That said, it is possible to invest in world-class businesses that pay reliable, rising dividends and benefit from the coming metaverse. These are not mutually exclusive endeavors.

You don’t have to buy stocks in unprofitable companies at 50 times sales.

Today, I want to tell you about five dividend growth stocks that are set to profit big time from the metaverse. Ready? Let’s dig in.

The first dividend growth stock that I want to highlight is Apple (AAPL).

Apple is a multinational technology company with a market cap of $3 trillion.

Apple is the first $3 trillion company in history. Amazing. Something else that’s amazing is that the company is, perhaps, positioned better than any other company on today’s list as it pertains to the metaverse. That’s because they’re the best company in the world when it comes to building out a seamless ecosystem across their integrated hardware and software.

And while that’s currently playing out on devices like MacBooks and iPhones, this will almost certainly soon be playing out on devices like headsets that can display Apple’s prowess in augmented reality and virtual reality – areas where Apple has been heavily investing, based on patent filings and hirings. But this metaverse thing is just icing on what’s already a delicious cake. A delicious dividend cake, that is.

Apple has increased its dividend for 10 consecutive years.

Even if you value the metaverse talk at $0 and think it’s all hype, it doesn’t matter. Apple is already an incredible company that’s set to continue growing its dividend for decades to come. But they’re not content to sit on their laurels. They’re skating to where the puck is going, not to where it’s been.

The 10-year dividend growth rate of 9.7% is nearly in the double digits and well in excess of inflation. And with a payout ratio of just 15.7%, there’s plenty, plenty more where that came from. On the other hand, the low yield of 0.5% doesn’t provide a lot of current income. But Apple is a compounder, not an income play. And what a compounder it’s been!

This stock is up more than 1,100% over the last decade!

That’s been powered by a near-quadrupling of EPS, which is almost unbelievable when you’re talking about a company with this kind of scale. And this is all without a single dime of metaverse money. Just think of what this company can do if there’s an entirely new virtual world that requires high-quality devices to access and interact with it. Imagine what a huge opportunity that is for arguably the world’s best device maker.

If I had to bet on just one high-quality dividend growth stock to dominate in a new real reality where the metaverse opens up a new virtual reality, it’d be Apple. I’ve heard the endless complaints about Apple’s valuation over the years, but those complainers have missed the point and missed the gains. Price is what you pay. Value is what you get. If you want a cheap stock, you can go after a low-quality name that performs poorly. Apple, on the other hand, deserves a lofty multiple.

The second dividend growth stock to talk about today is Broadcom (AVGO).

Broadcom is a global semiconductor and infrastructure software products company with a market cap of $274 billion.

The metaverse will require devices to enter and interact with it, as well as infrastructure to run it. And what will devices and infrastructure require? Semiconductors, of course. And as one of the largest and most successful chip companies, Broadcom is obviously in a great spot when it comes to supporting the underlying infrastructure of the metaverse, much in the same way they’re already supporting the underlying infrastructure of the Internet as we currently know and use it. And that could be a huge growth opportunity for the company, which should translate to the dividend.

Already, the company has increased its dividend for 12 consecutive years.

Indeed, Broadcom just increased their dividend only a month ago by nearly 14%. And that double-digit dividend growth is, in my opinion, set to persist for years to come. Now, that does pale to the monstrous 10-year dividend growth rate of 69.1%, but, you know, that’s not a realistic long-term expectation. Along with the double-digit dividend growth comes the stock’s yield of 2.5%. So this stock offers a fantastic combination of yield and growth, especially in the tech space. And with a payout ratio of 58.6%, based on adjusted EPS, along with the high underlying growth rate of the business, the dividend is headed a lot higher.

Broadcom is a wonderful business without the metaverse, but it could be even better with it.

Revenue over the last decade is up by more than 10x. EPS is up by more than sixfold over that time frame. Meanwhile, the stock is up by 2,200%. They recently blew out their Q4 report, beating on both the top line and bottom line – and even announcing a $10 billion buyback program. That’s without the metaverse. Now imagine what they could do with even more demand for semiconductor-powered devices, connectivity, and overall Internet infrastructure, which is almost guaranteed to happen as we look out over the next 10 years. I think Broadcom is a no-brainer for long-term dividend growth investors. And those who complain about the valuation today are the same who have been complaining about it for years, all while missing out on huge gains. Don’t be that myopic investor.

Next up, let’s have a quick conversation about Microsoft (MSFT).

Microsoft is a global technology corporation with a market cap of $2.5 trillion.

Microsoft is set to benefit from the metaverse in multiple ways. They’re obviously a software giant. But what could be particularly exciting is their dominance in gaming, which is a key application at these early stages. There’s also their strong market share in, and experience with, devices. And then you’ve got the cloud, where their Azure business is a leader and gives them exposure to all of the growth from even more data consumption and storage.

Microsoft handles both the in-your-face consumer stuff and the behind-the-scenes infrastructure. This is the second company on the list with a market cap of more than $1 trillion. How are these huge companies able to grow so fast? Well, it’s because technology is experiencing exponential growth. And the strong only get stronger. Speaking of this, and this is hard to say, and probably even harder to believe, but I think Microsoft is actually better than it’s ever been. That bodes very well for their ability to continue increasing the dividend.

Microsoft has increased its dividend for 20 consecutive years.

The 10-year dividend growth rate of 14.3% is outstanding. And you really do want to see big double-digit growth when you’re only getting a yield of 0.7%. The good news is, I expect Microsoft to be one of the most dependable dividend raisers over the coming decade – and I think those raises will remain in the low-double-digit range. That expectation is partially based on the low payout ratio of only 27.7%. But it’s also based on the incredible AAA-rated balance sheet that has well over $100 billion in total cash on it. But this isn’t just a dividend story. It’s a quality and growth story.

Microsoft has been one of the best stocks to own over the last decade, and I think it’ll be one of the best stocks to own over the next decade.

With the metaverse coming, Microsoft has a tailwind coming. And it’s not like they really need a tailwind. It’s already such a phenomenal company. Despite what the law of large numbers might tell you, this company is growing faster than companies a fraction of its size. Their recent Q1 report showed 21.8% YOY revenue growth and 49% YOY GAAP EPS growth. I mean, how many companies would love to have this kind of growth, let alone a company with a market cap of $2.5 trillion.

They have so many growth paths and so many options to take advantage of the metaverse, that you really can’t ignore this company if you want a high-quality dividend growth stock in the tech space. As with the other names on today’s list, this is a name that regularly gets derided over valuation. And yet it continuously grinds higher and makes its investors wealthy. So you could be on the side that complains. Or the side that gets wealthy. Your choice.

I now want to talk about a bit of a surprise idea for the metaverse, which is Nike (NKE).

Nike is a multinational apparel, footwear, and athletic accessories company with a market cap of $264 billion.

The metaverse will likely open up all kinds of new growth vectors for companies of all kinds. And retailers could be huge beneficiaries of this, as it’s a totally new and exciting way to market and sell products. While a lot of people think of Nike as basically a branded products company, or a manufacturer, they’re also a world-class retailer. They’ve moved to an omnichannel retail model, adeptly selling their products in any way the consumer wants them – wholesale, retail, direct, etc. That’s the way you win. And that’s the way you increase your profit and fund a growing dividend.

Nike has increased its dividend for 19 consecutive years.

And I have no doubt in my mind that they’ll continue to increase the dividend and end up as a Dividend Aristocrat in about six years. The 10-year dividend growth rate of 13.3% is fantastic, and it’s well in excess of the inflation rate. With a low payout ratio of 32.4%, the company has plenty of cushion for large future dividend increases. That said, the stock’s lowly yield of 0.7% leaves a lot to be desired. But as with the likes of Apple and Microsoft, this is about investing in a world-class business with tons of growth and compounding potential still in the tank.

Speaking of that, this stock has compounded at an annual rate of almost 24% over the last 10 years!

Using the Rule of 72, you’re doubling your money every three years at that compounding rate. And this is before the metaverse. But Nike knows what’s coming. And they’re already making moves. They’ve created “Nikeland”, an interactive virtual world on the Roblox game platform built around Nike. The company also recently acquired RTFKT, a creator of virtual sneakers and collectibles.

Nike doesn’t need the metaverse to do incredibly well for shareholders. But who’s complaining if you give a great company even more opportunities to engage with consumers and even more long-term growth potential? I’m certainly not.

Last but certainly not least, let’s talk about Qualcomm (QCOM).

Qualcomm is a global semiconductors and wireless technology company with a market cap of $205 billion.

Two chip companies on this list? You betcha. If you want to profit from the metaverse, or profit from pretty much anything going on with tech now and over the foreseeable future, you practically have to be in chips. This isn’t a zero-sum game here. It isn’t a fixed pie where one company getting more pie means another company getting less pie. There’s a lot of pie. And the pie keeps getting bigger.

Besides, most of these chip companies are focused in different areas. With the aforementioned Broadcom, you’re looking at a variety of components, such as RF filters for smart phones and chips for data centers. Qualcomm, on the other hand, is more involved in areas like IP licensing and 5G chipsets. And with the revolution of 5G that’s upon us coinciding with the movement into the metaverse, Qualcomm is positioned squarely at that intersection. And so is their dividend.

This company has already increased its dividend for 19 consecutive years.

The last 19 years have been great for the dividend. But the next 19 could be much, much better. Their impressive 10-year dividend growth rate of 13.3% is coincidentally right on par with Nike – but it’s not a surprise to see two high-quality companies rounding the track at the same speed. The difference here, though, is that Qualcomm’s stock offers a much higher yield – at 1.5% right now. And with a payout ratio of 34.6%, the company has plenty of financial room to continue aggressively increasing the dividend.

No matter how we’ll be accessing the metaverse in the future, it’s likely that Qualcomm is gonna get a piece of that action.

This is the king of licensing a massive trove of IP across the wireless space. And they’re a leader when it comes to mobile chipsets. Whether it be profiting from devices themselves, or the way in which data is transmitted wirelessly, Qualcomm is almost certainly going to make a lot of money from the metaverse and/or any other way in which people increasingly access mobile data and the Internet.

Whenever I witness people using their mobile phones while out and about, I see imaginary dollar signs with Qualcomm’s name on them. Maybe you believe in the metaverse. Maybe you don’t. Regardless, Qualcomm is profiting handsomely from all of the tech you and everyone you know is using every single day. This stock has almost tripled over the last five years alone. And I think it’ll continue to compound at a high rate over the coming years, with the metaverse only adding an extra gust to the tailwind that this magnificent company’s sails are already experiencing.

— Jason Fieber

P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.

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