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Dividend growth stocks typically outperform most other asset classes over a five- to 10-year period. I’ve selected 10 companies with strong records of dividend growth that could boost your portfolio’s long-term returns.
These large-cap companies have weathered some headwinds while continuing to grow their dividends at a dizzying pace. Let’s look at why these top dividend growers are worth buying as part of a long-term capital appreciation and income generation strategy.
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1. Lowe’s
Home improvement retailer Lowe’s (NYSE:LOW) has increased its dividend by 15.8% annually over the past five years. With a yield of 1.93% and a P/E ratio of 19.1, it strikes a balance between income and value. Its strong position in the home improvement market supports future dividend growth.
2. Visa
Payment processing company Visa (NYSE:V) has increased its dividend by 15.7% annually over the past five years. Despite a yield of just 0.78%, its market dominance and high profit margins suggest room for future payments growth. However, considering Visa stock trades at a price-to-earnings ratio of 29.6, its shares trade at a premium.
3. Parker Hannifin
Industrial technology company Parker Hannifin (NYSE: PH) has had a 13.1% dividend growth rate over the past five years. Its broad product range and focus on growth markets such as aerospace continue to increase. Its stock yields a generous 1.2%, but it’s priced at a premium at 25.6 times earnings.
4. Nordson
Precision manufacturing solutions provider Nordson (NASDAQ:NDSN) has increased its dividend by 12.3% annually over the past five years. Its specialized manufacturing solutions and global reach position it for future payout growth. Nordson stock has a below-average yield of 1.15% and trades in premium territory at a price-to-earnings ratio of 28.2.
5. Abbott Laboratories
Diversified healthcare company Abbott (NYSE:ABT) has increased its dividend by 11.4% annually over the past five years. Its diverse portfolio of medical devices, diagnostics, and nutrition products provides multiple avenues for growth and a margin of safety for growth in any of its segments. Abbott stock yields a high 2.16%, but is one of the most expensive dividend growth stocks on this list, trading at a P/E ratio of 32.2.
6. Goals
Retail chain giant Target (NYSE:TGT) has increased its dividend by 11.1% annually over the past five years. Its omnichannel strategy and brand strength have helped it navigate numerous challenges in a competitive retail landscape. Target stock has a fairly generous yield of 2.99%, and its shares trade at a cheap P/E ratio of 16.8. The retail giant positions itself as a top pick for value-oriented dividend investors.
The story continues
7. Nike
Athletic footwear and apparel company Nike (NYSE:NKE) has increased its dividend by 10.8% annually over the past five years. Despite a slow start to its DTC activities, its global brand strength and focus on direct-to-consumer (DTC) sales should support future dividend growth.
The 2.04% yield and 19.5 P/E ratio offer an attractive combination of income and value. Nonetheless, Nike stock has been in a long-term downtrend due to unfavorable competitive dynamics in the sports apparel industry, which is a key risk factor that investors should carefully consider from a weighting perspective.
8. S&P Global
Financial intelligence and analytics provider S&P Global (NYSE:SPGI) has increased its dividend by 9.8% annually over the past five years. Its key role in financial markets and data analysis positions it for continued long-term success.
S&P Global shares, on the other hand, yield just 0.76% and trade at an eye-popping 53.7 times earnings. However, for investors willing to hold on for the long term, its wide economic moat in a key sub-sector of the financials industry should translate into solid dividend growth and share price appreciation.
9. Amgen
Biotech company Amgen (NASDAQ:AMGN) has increased its dividend by 9.2% annually over the past five years. Its pipeline and focus on innovative therapies set the stage for future dividend increases and strong share price appreciation. Amgen stock yields a high 2.72%, but it trades at a high P/E ratio of 47.4. This premium valuation could be justified if Amgen’s weight loss pipeline delivers.
10. AbbVie
Biotech company AbbVie (NYSE:ABBV) has increased its dividend by 7.69% annually over the past five years despite an aggressive acquisition strategy and facing headwinds from the loss of exclusivity for Humira.
However, its broad product range and strong clinical pipeline should support additional dividend increases over the rest of the next decade. AbbVie is rated a high-yield stock, with its shares yielding an annualized yield of 3.06%. But its P/E ratio of 51.3 may limit share price appreciation in the near term.
Don’t miss this second chance, it’s a potentially lucrative opportunity
Have you ever felt like you missed out on buying the hottest stocks? Then you’ll want to hear this.
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We are currently issuing “double down” alerts for three incredible companies, and there may not be another opportunity like this in the near future.
Check out the 3 moves of Double Down »
*Stock Advisor returns expire July 15, 2024
George Budwell works at Target. The Motley Fool has positions in and recommendations for Abbott Laboratories, Nike, S&P Global, Target, and Visa. The Motley Fool recommends Amgen and Lowe’s Companies and recommends the following picks: Nike is priced at $47.50 in January 2025. The Motley Fool has a disclosure policy.
The 10 Best Dividend Growth Stocks to Buy and Hold Forever Originally Posted by The Motley Fool
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