In this article, we discuss 13 best dividend growth stocks with 10%+ yearly increases. You can skip our detailed analysis of dividend growth stocks and their performance in the past, and go directly to read 5 Best Dividend Growth Stocks With 10%+ Yearly Increases.
The dividend growth strategy is like nurturing a tree for long-term fruit. It's an investment approach where the focus is on companies that consistently increase their dividends over time. This means they're not just paying dividends, but actively growing them, which signals financial health and stability. According to a report by ProShares, dividend growth strategies have shown impressive resilience, outperforming the broader market over the years. They've not only weathered turbulent times but also thrived in upward-trending markets. The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) are some of the best examples of dividend growth stocks as these companies maintain decades-long dividend growth streak.
Dividend-paying stocks serve a crucial role beyond just providing dividends. They often demonstrate a defensive quality, which becomes valuable when safeguarding wealth is necessary to maintain a consistent income. Eagle Asset Management's report studied periods when the S&P 500 experienced significant declines of at least 15%, followed by a return to its previous high. The report utilized three benchmarks centered on dividends to highlight the significance of investing not only in dividend-yielding companies but also in those that consistently increase their dividends over time. Upon analyzing the data closely, it was evident that indexes comprising dividend-paying companies typically outperform the broader market, such as the S&P 500, specifically during extended downturns. This illustrates the resilience and potential for better performance of dividend-oriented investments during challenging market phases.
Dividends hold a significant role in the global stock market landscape, constituting a substantial portion of the MSCI World Index's yearly returns, amounting to about 34% since February 1, 1970. Engaging in extended ownership of companies focused on dividend growth has offered various notable benefits historically. These advantages encompass robust returns both in absolute terms and concerning risk-adjusted performance across entire market cycles. Such investments have showcased lower volatility compared to the broader MSCI World Index, demonstrating an ability to preserve capital even amidst challenging market conditions. Additionally, they present a diversified income source that has the potential for both income growth and appreciation of capital.
Nuveen's report stressed how increasing dividends over time is important for shareholders. It found that companies worldwide that regularly raised their dividends did better than those that didn't pay dividends when markets got uncertain, especially when measured by the CBOE Volatility Index (VIX). Since interest rates and prices for things are going up and the stock market might stay uncertain for a while, companies that are good at handling their money and can keep increasing their shareholder return could be a good way to make money and protect against this uncertainty. In view of this, we will discuss some of the best dividend stocks with over 10% of yearly dividend growth.
13 Best Dividend Growth Stocks With 10%+ Yearly Increases
For this list, we scanned Insider Monkey’s database of Q3 2023 and picked companies that have stable dividend policies. Out of those companies, we shortlisted the stocks that have raised their dividends at an annual average rate of over 10% in the past five years. From the resultant dataset, we picked 12 stocks with the highest number of hedge fund investors.
5-Year Average Annual Dividend Growth Rate: 13.80%
Texas Instruments Incorporated (NASDAQ:TXN) is an American semiconductor company that designs and manufactures a wide range of semiconductor products. They produce various types of integrated circuits and semiconductors used in a multitude of electronic devices across different industries. The company currently pays a quarterly dividend of $1.30 per share, having raised it by 5% in October this year. This marked the company's 12th consecutive year of dividend growth. In the past five years, it has raised its payout by 13.80%, which makes TXN one of the best dividend stocks on our list. The stock has a dividend yield of 3.25%, as of December 12.
At the end of Q3 2023, 53 hedge funds tracked by Insider Monkey owned stakes in Texas Instruments Incorporated (NASDAQ:TXN), compared with 56 in the preceding quarter. These stakes have a collective value of over $2.06 billion.
5-Year Average Annual Dividend Growth Rate: 19.29%
Lowe's Companies, Inc. (NYSE:LOW) is a North Carolina-based retail company that specializes in selling a wide range of products and supplies for home improvement, maintenance, renovation, and decoration. The company is a Dividend King with 59 consecutive years of dividend growth under its belt. Moreover, its average dividend growth in the past five years comes in at 19.29%. The company offers a quarterly dividend of $1.10 per share and has a dividend yield of 2.13%, as of December 12.
As of the close of Q3 2023, 63 hedge funds tracked by Insider Monkey owned stakes in Lowe's Companies, Inc. (NYSE:LOW), down slightly from 64 in the preceding quarter. These stakes are collectively valued at over $3.15 billion. Among these hedge funds, Pershing Square was the company's leading stakeholder in Q3.
5-Year Average Annual Dividend Growth Rate: 12.37%
Costco Wholesale Corporation (NASDAQ:COST) operates a chain of membership-based warehouse clubs that offer a wide range of products at discounted prices to its members. The company currently pays a quarterly dividend of $1.02 per share and has a dividend yield of 0.65%, as of December 12. In the past five years, the company has raised its payouts at an average rate of 12.37% and it also holds a 19-year streak of consistent dividend growth. COST is among the best dividend stocks on our list.
Insider Monkey's database of the third quarter of 2023 showed that 65 hedge funds owned stakes in Costco Wholesale Corporation (NASDAQ:COST), with a total collective value of more than $3.5 billion. With over 2.7 million shares, Fisher Asset Management was the company's leading stakeholder in Q3.
5-Year Average Annual Dividend Growth Rate: 11.13%
NIKE, Inc. (NYSE:NKE) is a multinational corporation known for designing, developing, manufacturing, and marketing athletic footwear, apparel, equipment, and accessories. On November 15, the company declared an 8.8% hike in its quarterly dividend to $0.37 per share. This was the company's 22nd consecutive year of dividend growth, which makes NKE one of the best dividend stocks on our list. In the past five years, the company has raised its payouts at an annual average rate of 11.13%. The stock's dividend yield on December 12 came in at 1.25%.
At the end of September 2023, 69 hedge funds owned stakes in NIKE, Inc. (NYSE:NKE), compared with 70 in the previous quarter, as per Insider Monkey's database. These stakes are collectively valued at over $3.47 billion.
5-Year Average Annual Dividend Growth Rate: 19.25%
Broadcom Inc. (NASDAQ:AVGO) is a global technology company that designs, develops, and supplies a wide range of semiconductor and infrastructure software solutions. The company declared a 14% hike in its quarterly dividend to $5.25 per share on December 7. Through this increase, the company has stretched its dividend growth streak to 13 years, which makes AVGO one of the best dividend stocks on our list. The stock has a dividend yield of 2%, as of December 12.
Broadcom Inc. (NASDAQ:AVGO) was a part of 87 hedge fund portfolios at the end of Q3 2023, up from 78 in the preceding quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a total value of nearly $6.2 billion. Among these hedge funds, Fisher Asset Management was the company's leading stakeholder in Q3.
5-Year Average Annual Dividend Growth Rate: 11.24%
An American financial services company, Bank of America Corporation (NYSE:BAC) provides a wide range of banking and related services to its consumers. The company has been paying regular dividends to shareholders for the past 24 years and pays a quarterly dividend of $0.24 per share. The stock has a dividend yield of 3.13%, as of December 12. With a 5-year annual average dividend growth of 11.24%, BAC is one of the best dividend stocks on our list.
As of the end of the third quarter of 2023, 88 hedge funds tracked by Insider Monkey reported having stakes in Bank of America Corporation (NYSE:BAC), compared with 90 in the previous quarter. The consolidated value of these stakes is over $31.3 billion. Warren Buffett's Berkshire Hathaway owned the largest stake in the company, worth over $28.2 billion.
5-Year Average Annual Dividend Growth Rate: 14.87%
Oracle Corporation (NYSE:ORCL) is a multinational technology company known primarily for its software products and services. In the past five years, the company has raised its dividends at an annual average rate of 14.87% and it has been growing its dividends for eight consecutive years. The company offers a quarterly dividend of $0.40 per share for a dividend yield of 1.55%, as of December 12.
The number of hedge funds in Insider Monkey's database holding stakes in Oracle Corporation (NYSE:ORCL) grew to 88 in Q3 2023, from 84 in the previous quarter. The collective value of these stakes is $4.7 billion.
5-Year Average Annual Dividend Growth Rate: 14.97%
An American multinational pharmaceutical company, Eli Lilly and Company (NYSE:LLY) ranks sixth on our list of the best dividend stocks for dividend growth. The company's 5-year annual average dividend growth stands at 14.97% while maintaining a 138-year run of paying regular dividends to shareholders. It currently pays a quarterly dividend of $1.30 per share and has a dividend yield of 0.89%, as of December 12.
Insider Monkey’s database of Q3 2023 showed that 102 hedge funds owned stakes in Eli Lilly and Company (NYSE:LLY), up significantly from 87 in the previous quarter. These stakes have a consolidated value of more than $9 billion.