Prediction: These Dividend Stocks Could Outperform Growth Stocks in the Next Decade

Companies whose capital allocation plans prioritize dividends tend to have less money to reinvest into the business than they otherwise would, which sometimes leads to lower-than-average returns. That's not always the case, though. Some top dividend stocks can outperform growth-oriented corporations (as measured by major growth-focused ETFs) that don't issue payouts and hence tend to reinvest a higher percentage of their earnings back into the business.

Let's look at two solid dividend payers that could outperform growth stocks in the next decade.

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A drugmaker with strong growth prospects

The group of stocks that arguably represent the cream of the crop among dividend payers are the Dividend Kings, which have raised their payouts for at least 50 consecutive years.

AbbVie (NYSE: ABBV), a leading pharmaceutical company, is part of this clique. The entity has a history of raising its dividend payouts for 53 years in a row, formerly as the pharma division of Abbott Laboratories, and later as an independent company since 2013.

The stock's forward yield of 2.8% is higher than the S&P 500's average of 1.2%, and its cash payout ratio of 61.8% is reasonable enough. AbbVie should maintain strong dividend growth over the next decade, but the company also has excellent prospects that could allow it to outperform growth stocks through 2035.

AbbVie has a deep lineup that boasts products across several therapeutic areas, granting it a diversified stream of revenue. And its drugs are always in high demand regardless of economic conditions. The company may underperform its growth-oriented counterparts when the economy is doing well, but the reverse will tend to be true when things aren't so good.

Its revenue and earnings should grow at a good clip, partly thanks to two immunology medicines, Skyrizi and Rinvoq. These therapies have been on a tear, helping AbbVie move beyond one of the biggest patent cliffs in the history of the industry, that of its former best-selling drug, Humira. And the company expects them to continue posting strong sales growth into the next decade. AbbVie recently secured Rinvoq's patent exclusivity until 2037, at least in the U.S., by making deals with generic drugmakers.

Moreover, the company should succeed in launching brand-new medicines between now and then. Because it will have no significant loss of patent exclusivity through the end of this decade, new launches will further boost top-line growth. Over the past 10 years, AbbVie has outperformed the Vanguard S&P 500 Growth ETF (with dividends reinvested). It could do the same through 2035.

This tech giant hasn't said its last word

Apple (NASDAQ: AAPL) was once a top growth stock, but it has arguably lost that title. Over the past three years, the iPhone maker's revenue and earnings growth have been negative several times:

AAPL Revenue (Quarterly YoY Growth) data by YCharts.

Even when they weren't, they generally lagged those of its similarly sized trillion-dollar tech peers. But even if Apple is no longer a growth stock, it still has excellent prospects. The tech giant has a large ecosystem of users, with more than 2 billion devices in circulation. Its recent launch of the iPhone 17 -- which featured several well-received upgrades -- could power a strong cycle of renewals and further deepen its ecosystem.

Apple's large installed base will allow it to increase its subscription-based revenue. Its services segment boasts over 1 billion paid subscriptions, and has arguably only scratched the surface of the many opportunities in this area, from fintech to streaming and more. And as the high-margin services unit captures a larger portion of its sales, Apple's overall margins and profits will increase.

The company should also succeed in overcoming tariff-related challenges. It has been investing in its local manufacturing capabilities to help appease the administration, a strategy currently being used successfully by some pharmaceutical companies.

Then there's Apple's income program. Over the past decade, the company has doubled its dividend, and its cash payout ratio remains extremely low at 14%. It has miles of room remaining for further dividend hikes.

Apple is a great long-term bet despite its recent challenges. The stock could once again provide outstanding returns over the next 10 years.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Apple. The Motley Fool has a disclosure policy.