In this article, we will take a look at some of the best Cash App stocks that pay dividends.
Technology has seamlessly woven itself into our daily lives in today’s digital era, significantly impacting how we manage finances. The shift from physical wallets to digital platforms is becoming increasingly common. Cash App has become a prominent player in the digital financial space, steadily growing in popularity. This mobile payment service allows users to send, receive, and request money from individuals and businesses alike. Since its launch in 2013, Cash App has become one of the most widely used digital wallets in the US, competing with other platforms like Venmo and Zelle. The Consumer Financial Protection Bureau (CFPB) reported that Cash App now boasts over 56 million accounts, with Block, its developer, earning over 50% of its gross profit from the app in 2023.
Also read: 15 Stocks to Invest in with Steady Dividends
The pandemic served as a catalyst, speeding up the rising trend of app usage, especially in the financial sector. With lockdowns and social distancing measures in place, people increasingly relied on online platforms for shopping, highlighting the importance of contactless payments. This change in consumer habits drove a surge in app usage, enabling a smooth transition to remote and contactless transactions. Zelle, the peer-to-peer money transfer app, reported a 27% increase in network transactions during the first half of 2024, with nearly $500 billion in payments processed. In the first six months of the year, consumers and businesses completed 1.7 billion transactions across 143 million accounts, as reported by Bloomberg.
This mainly highlights the promising future of online payments and their continued growth across upcoming generations. In fact, Block CFO Amrita Ahuja shared with CNBC’s Jim Cramer that Cash App’s payment services are particularly popular among younger consumers. Ahuja pointed out that the Cash App card, a free Visa debit card, has gained significant traction with this demographic. She also highlighted that Cash App successfully engages the younger generation through initiatives like a family program, which enables adults to sponsor accounts for teenagers.
That said, with success comes increased risk. Recently, Cash App has faced challenges, as the CFPB accused the platform of enabling widespread fraud and misleading its users. In 2023, Hindenburg Research, a well-known short seller, claimed that Block had inflated the number of Cash App users and highlighted illegal activities on the app. Block dismissed the report as “factually inaccurate and misleading.” In its enforcement action, the CFPB stated that Block is legally obligated to investigate and resolve disputes regarding unauthorized transactions, but described the company’s efforts as “severely lacking.” Instead, Block reportedly directed users to request their banks to reverse transactions, which Block would subsequently deny. As a result, Block will pay up to $120 million in refunds to consumers, establish a 24-hour customer service program, and pay a $55 million fine.
Across different investment platforms, investors consistently prioritize generating cash flow. This focus on cash generation drives them towards dividend stocks, which are well-known for offering shareholders a steady stream of income. Given this, we will take a look at some of the best Cash App stocks that pay dividends.
Photo by buian_photos on Unsplash
Our Methodology:
For this article, we reviewed multiple reliable websites and videos that discuss dividend stocks available on Cash App. Our goal was to identify stocks that were consistently recommended by credible sources and analyst reports. After analyzing the gathered information, we selected 12 stocks that stood out due to their dividend yields exceeding 4% as of January 21. These stocks are ranked in order of their dividend yields, starting from the lowest. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12. Chevron Corporation (NYSE:CVX)
Dividend Yield as of January 21: 4.11%
Chevron Corporation (NYSE:CVX) is a California-based multinational energy company that manufactures and sells a range of high-quality refined products. The company is a major force in the energy industry, with exploration and production at its core. It extracts crude oil and natural gas from resource-rich areas such as the Permian Basin, utilizing advanced recovery methods. This upstream activity is a crucial component of Chevron’s integrated operations. CVX has surged by over 11% in the past 12 months.
Chevron Corporation (NYSE:CVX) is catching the eye of investors with its extensive operations and robust cash flow. The CEO recently announced that the company is set to boost its free cash flow by $6 billion to $8 billion in the coming year, alongside plans to cut costs by several billion dollars. These improvements are expected to be driven by new or expanded oil production projects in Kazakhstan, US shale regions, and the offshore Gulf of Mexico.
Chevron Corporation (NYSE:CVX) demonstrated a solid cash position in its most recent quarter, generating $9.7 billion in operating cash flow, a significant increase from $46.3 billion in the same period last year. The company returned $7.7 billion to shareholders through dividends and share buybacks. With this strong cash flow, Chevron has maintained a dividend growth streak of over 37 years and currently offers a quarterly dividend of $1.63 per share. With a dividend yield of 4.11% as of January 21, CVX is one of the best Cash App stocks on our list.
At the end of Q3 2023, 63 hedge funds tracked by Insider Monkey owned stakes in Chevron Corporation (NYSE:CVX), compared with 64 in the previous quarter. These stakes have a consolidated value of over $21 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
11. Comerica Incorporated (NYSE:CMA)
Dividend Yield as of January 21: 4.30%
Comerica Incorporated (NYSE:CMA) is an American financial services company that offers a wide range of financial products and related services to its consumers. In the third quarter of 2024, growth in customer deposits helped offset subdued loan demand, leading to net interest income surpassing expectations for the quarter. The company prioritized expense management, adhering to action plans established earlier in the year. Credit quality remained robust, with net charge-offs at 8 basis points, significantly below historical averages, and future migration is anticipated to stay manageable. A conservative stance on capital management was maintained, as the estimated CET1 capital ratio increased to 11.97%, well above the 10% target. In addition, a downward shift in the rate curve resulted in a notable improvement in AOCI for the quarter.
Comerica Incorporated (NYSE:CMA) reported a net interest income of $534 million in Q3 2024, up from $533 million in the previous quarter. The company’s net income for the quarter came in at $184 million, which fell from $206 million in Q2. However, its cash position came in strong. The company’s cash and due from banks came in at $870 million at the end of September 30, 2024, up from $719 million at the end of June 30, 2024.
Ariel Investments highlighted CMA in its Q3 2024 investor letter. Here is what the firm has to say:
“We purchased Comerica Incorporated (NYSE:CMA) a financial holding company whose revenue is primarily generated across three business segments: the Commercial Bank, the Retail Bank and Wealth Management. The company offers a high-touch business model with an enhanced focus on long-term customer relationships. Lower deposit levels and declining demand for loans driven by the Fed’s quantitative tightening regime as well as deteriorating credit conditions presented an attractive entry point. Looking ahead, we believe the company is well-positioned to take advantage of economic growth, which should lead to enhanced deposit gathering and loan generation. Additionally, we expect more moderate rate cuts to allow for margin expansion and slower deposit cost increases. At today’s valuation, we believe the risk/reward is skewed to the upside.”
Comerica Incorporated (NYSE:CMA) has remained committed to its shareholder obligation as the company returned $94 million to investors through dividends in the most recent quarter. Currently, it pays a quarterly dividend of $0.71 per share and has a dividend yield of 4.30%, as of January 21.
The number of hedge funds tracked by Insider Monkey owning stakes in Comerica Incorporated (NYSE:CMA) grew to 46 in Q3 2024, from 38 in the previous quarter. These stakes are worth over $1.2 billion in total.
10. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Dividend Yield as of January 21: 4.37%
T. Rowe Price Group, Inc. (NASDAQ:TROW) ranks tenth on our list of the best Cash App stocks that pay dividends. The American asset management company offers a wide range of related products and services to its consumers. The company recently reported that its assets under management slid 3.6% in December to $1.61 trillion as it saw net outflows of $10.9 billion and equity markets declined. However, it is just a blip on the road for the company as it is exploring new opportunities.
T. Rowe Price Group, Inc. (NASDAQ:TROW) is concentrating on developing its own ETF business while expanding into high-demand areas such as alternative investments. With no long-term debt on its balance sheet, it enjoys significant flexibility to adapt and make strategic adjustments as necessary.
The company delivered mixed earnings in the third quarter of 2024. The company’s revenue increased by 7% year-over-year to $1.8 billion but missed analysts’ projections by over $61 million. On the upside, net income saw a notable rise of 33.1%, climbing to $603 million from $453 million in the prior year. T. Rowe Price Group, Inc. (NASDAQ:TROW)’s equity ETFs showed strong performance, with improved sales pipelines and lower-than-anticipated net outflows. Moreover, its strategic emphasis on alternative investments, including private credit, is poised to provide substantial diversification advantages.
Lindsell Train Ltd made the following comment about TROW in its Q3 2024 investor letter:
“T. Rowe Price Group, Inc. (NASDAQ:TROW) is the only asset manager held in your Fund. The headwinds to this industry, notably the long-term shift to passive and resultant fee pressures, are well known, leading to mouthwatering valuations for what can be extremely profitable companies. In our view T. Rowe stands out with trillion-dollar scale, exceptional margins, and a long track-record of headwind-defying growth, affording it a place in our portfolio since inception. Its shares, however, have not been stellar performers over this four-year+ period, returning just c.30% in USD vs. the MSCI North America’s c.120%. In this month’s update we outline our reasons for continued optimism.” (Click here to read the full text)
T. Rowe Price Group, Inc. (NASDAQ:TROW) also holds a strong dividend history. The company is a Dividend Aristocrat with 38 consecutive years of dividend growth under its belt. It currently offers a quarterly dividend of $1.24 per share and has a dividend yield of 4.36%, as of January 21.
As of the close of Q3 2024, 26 hedge funds in Insider Monkey’s database held stakes in T. Rowe Price Group, Inc. (NASDAQ:TROW), compared with 28 in the previous quarter. These stakes have a total value of over $422.5 million. With nearly 2 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
