In this article, we discuss 14 dividend growth stocks with highest growth rates. You can skip our detailed analysis of dividend growth stocks and their overall performance, and go directly to read 5 Dividend Growth Stocks with Highest Growth Rates.
According to a report by ProShares, the S&P 500 Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, delivered a 10.68% return since its inception in 2005 through December 2023. The index outperformed the S&P 500 during this period, which returned 10.05%. The report also mentioned that the Dividend Aristocrats index exhibited a lower volatility of 15.30% in this timeframe, compared with a 16.24% volatility of the benchmark.
Regularly growing dividends is not an easy task as it demands financial stability, well-established business models, and a high level of reliability. For example, only a small fraction of companies in the S&P 500, specifically just 13%, qualify for inclusion in the S&P 500 Dividend Aristocrats Index. These companies are known brands with strong reputations for their quality, investment appeal, and resilience in the market. Brian Bollinger, president of Simply Safe Dividends, spoke with CNBC about dividend growth stocks. He said that investors should explore dividend aristocrats as these companies are typically well-established and financially stable. He further highlighted the importance of building a diversified portfolio comprising such firms, as it can offer peace of mind knowing that the underlying investments will continue to generate growing passive income over time, regardless of market fluctuations. Here are some comments from the analyst:
“When stock prices fall, it’s so easy to panic, but dividend investing can overcome that because you’re just trying to stay focused on your income stream. You don’t care so much about the market’s short-term ups and downs anymore.”
In addition to their strong returns, dividend growers have also provided significant downside protection over the years, while capturing gains during market upswings. According to a report by Lord Abbett, this trend was particularly evident when examining the trailing one-year, which was marked by volatility in equity markets. During this period, dividend growth stocks experienced approximately 78% of the market downturn while outperforming the broader S&P 500 by around 11% during market rallies. The report also mentioned that dividend growers also present an opportunity for substantial total returns, particularly in scenarios where equity market returns are below average.
The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and Colgate-Palmolive Company (NYSE:CL) are some of the best dividend stocks that have proved their resilience in severe market conditions while growing their dividends for decades.
14 Dividend Growth Stocks with Highest Growth Rates
Our Methodology:
For this article, we used a stock screener to identify dividend stocks that have maintained consistent dividend payouts over time. From that list, we chose companies that have increased their dividends by an average of more than 15% annually over the last 3 years. We also mentioned hedge fund sentiment around each stock according to Insider Monkey’s database of 933 hedge funds, as of Q4 2023. The stocks are ranked in ascending order of their annual average dividend growth in the past three years. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
3-Year Average Annual Dividend Growth Rate: 15.15%
Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company that manufactures and develops a wide range of medicines for serious ailments. The company has never missed a dividend since 1885 and also raised its payouts consistently over the past 10 years. With a 3-year average annual dividend growth rate of over 15%, LLY is one of the best dividend stocks on our list. Eli Lilly and Company (NYSE:LLY) currently offers a quarterly dividend of $1.30 per share and has a dividend yield of 0.70%, as of April 23.
At the end of Q4 2023, 102 hedge funds tracked by Insider Monkey held stakes in Eli Lilly and Company (NYSE:LLY), which remained unchanged from the previous quarter. The consolidated value of these stakes is more than $11 billion.
3-Year Average Annual Dividend Growth Rate: 17.39%
The Kroger Co. (NYSE:KR) is an Ohio-based retail company that operates supermarkets and department stores across the US. On March 14, the company declared a quarterly dividend of $0.29 per share, which was in line with its previous dividend. Overall, it has been growing its dividends for the past 17 years, with a 3-year average dividend growth rate of 17.39%. The stock offers a dividend yield of 2.07%, as of April 23.
The number of hedge funds tracked by Insider Monkey owning stakes in The Kroger Co. (NYSE:KR) grew to 45 in Q4 2023, from 41 in the previous quarter. The collective value of these stakes is over $3.5 billion. Warren Buffett's Berkshire Hathaway owned 50 million shares in the company, becoming its leading stakeholder in Q4.
3-Year Average Annual Dividend Growth Rate: 17.61%
With a 3-year average annual dividend growth rate of 17.61%, Target Corporation (NYSE:TGT) is next on our list of the best dividend stocks with the highest growth rates. The American retail company currently pays a quarterly dividend of $1.10 per share and has a dividend yield of 2.64%, as of April 23. It has been rewarding shareholders with growing dividends for the past 52 years. In addition to this, the company returned $508 million to shareholders through dividends in the fourth quarter of 2023, up from $497 million in the past year.
As of the end of Q4 2023, 58 hedge funds in Insider Monkey's database held stakes in Target Corporation (NYSE:TGT), the same as in the preceding quarter. These stakes are worth over $1.5 billion in total.
3-Year Average Annual Dividend Growth Rate: 17.91%
Parker-Hannifin Corporation (NYSE:PH) is an American manufacturing company that deals in motion and control technologies and systems. It is one of the best dividend stocks on our list as the company has raised its payouts for 66 years in a row. Its 3-year average annual dividend growth comes in at nearly 18%. The company offers a quarterly dividend of $1.48 per share and has a dividend yield of 1.08%, as recorded on April 23.
Parker-Hannifin Corporation (NYSE:PH) was a popular buy among elite funds in Q4 2023 with hedge fund positions jumping to 63, from 52 in the previous quarter, as per Insider Monkey's database. The stakes held by these hedge funds have a total value of over $1.64 billion. Among these hedge funds, Diamond Hill Capital was the company's leading stakeholder in Q4.
Zoetis Inc. (NYSE:ZTS) is a New Jersey-based company that produces medicines and vaccinations for pets and livestock. In December 2023, the company hiked its dividend by 15% and now pays a quarterly dividend of $0.432 per share. Over the past three years, it has raised its payouts at an annual average rate of over 23%, which makes it one of the best dividend stocks. The stock's dividend yield on April 23 came in at 1.16%.
At the end of December 2023, 50 hedge funds in Insider Monkey's database held stakes in Zoetis Inc. (NYSE:ZTS), compared with 56 in the previous quarter. These stakes are collectively valued at over $1.3 billion.
MSCI Inc. (NYSE:MSCI) is an American finance company that provides investment decision support tools and services for institutional investors around the globe. In the first quarter of 2024, the company paid $126.8 million to shareholders through dividends. Moreover, the company has raised its payouts consistently for the past eight years with a 3-year annual average growth rate of 23.6%. The company's quarterly dividend currently comes in at $1.60 per share and has a dividend yield of 1.44%, as of April 23.
The number of hedge funds owning stakes in MSCI Inc. (NYSE:MSCI) grew to 42 in Q4 2023, from 39 in the previous quarter, as per Insider Monkey's database. These stakes are valued at over $1.7 billion. Among these hedge funds, Impax Asset Management was the company's leading stakeholder in Q4.
Lowe’s Companies, Inc. (NYSE:LOW) is an American retail company that specializes in home improvement and offers related services and products to its consumers. On March 22, the company declared a quarterly dividend of $1.10 per share, which fell in line with its previous dividend. Overall, it has raised its payouts for the past 59 consecutive years, which makes it one of the best dividend growth stocks on our list. The stock supports a dividend yield of 1.89%, as of April 23.
Insider Monkey's database of Q4 2023 indicated that 68 hedge funds held stakes in Lowe’s Companies, Inc. (NYSE:LOW), up from 63 in the previous quarter. The total value of these stakes is more than $3.7 billion.
3-Year Average Annual Dividend Growth Rate: 28.06%
The Goldman Sachs Group, Inc. (NYSE:GS) is an American investment banking company that offers related financial services. In the past three years, the company has raised its payouts at an annual average rate of over 28%. It currently pays a quarterly dividend of $2.75 per share and has a dividend yield of 2.60%, as of April 23.
According to Insider Monkey's database of Q4 2023, 69 hedge funds held investments in The Goldman Sachs Group, Inc. (NYSE:GS), up from 68 in the previous quarter. The consolidated value of these stakes is over $6.3 billion. With over 5.5 million shares, Fisher Asset Management was the company's leading stakeholder in Q4.
3-Year Average Annual Dividend Growth Rate: 28.91%
Canadian Natural Resources Limited (NYSE:CNQ) ranks sixth on our list of the best dividend stocks with the highest growth rates. The Canada-based oil and natural gas company has raised its payouts at an annual average rate of nearly 29% over the past three years and also maintains a 25-year track record of consistent dividend growth. The company offers a quarterly dividend of C$1.05 per share and has a dividend yield of 4.05%, as of April 23.
At the end of the December quarter of 2023, 41 hedge funds held stakes in Canadian Natural Resources Limited (NYSE:CNQ), which remained the same as in the previous quarter, according to Insider Monkey's database. The total worth of these stakes is roughly $2 billion in total.
