In this article, we discuss 15 best S&P 500 dividend stocks for dividend growth. You can skip our detailed analysis of dividend growth stocks and their performance over the years, and go directly to read 5 Best S&P 500 Stocks For Dividend Growth.
Tech stocks have been the center of attention in the market this year, while dividend stocks have fallen behind. The S&P 500 Dividend Aristocrats Index, which tracks the performance of companies that have raised their dividends for over 25 consecutive years, returned 2.93% so far this year, significantly underperforming the broader market, which delivered a 17.35% return to shareholders year-to-date.
However, companies worldwide have continued to distribute dividends to their shareholders, which indicates that they have sustainable earnings. According to a recent report by Janus Henderson, global dividends reached an all-time high in the second quarter of 2023 due to significant contributions from major banks, which were responsible for half of the overall growth. During the quarter, global dividend payments increased by 4.9% to a total of $568.1 billion. The report also mentioned that 88% of the companies worldwide increased their dividends or held them steady in Q2. Dividends distributed by U.S. companies increased by a modest 2.6% to reach $148 billion, with healthcare and real estate companies contributing to this growth.
When considering a dividend investing strategy, dividend growth stocks become top choices for investors. One reason for this inclination is that dividend growth stocks provide a consistent stream of income to shareholders. Secondly, companies with a history of increasing dividends often have strong financials and stable operations. During market downturns or economic challenges, these stocks may show more resilience, providing a degree of protection for your portfolio. Moreover, dividend growth can outpace inflation, as we have described in detail in our article, 25 Things Every Dividend Investor Should Know.
Analysts strongly recommend investing in dividend stocks to weather severe economic conditions. Erin Browne, a portfolio manager at Pimco, spoke with Barron’s about dividend growth stocks and their importance in this environment. Here are some comments from the analyst:
“Those stocks will do well—and really show their stripes and outperform—in an environment where we start to price in a slowdown and certainly price in the Fed starting to cut rates.”
She further said that dividend aristocrats and the like can provide good value for portfolios with a long-term investment horizon. For example, companies such as The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) have raised their dividends for decades, which highlights their sound financial health. In this article, we will discuss some of the best dividend stocks in the S&P 500 for growth.
For this article, we looked at S&P 500 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 10% annually over the last 5 years. We also mentioned hedge fund sentiment around each stock according to Insider Monkey's database as of Q2 2023. The stocks are ranked in ascending order of their annual average dividend growth in the past five years.
Kinder Morgan Inc. (NYSE:KMI) is a Texas-based energy company that operates and owns an extensive network of pipelines and terminals that transport and store various energy products. On July 19, the company declared a quarterly dividend of $0.2825 per share, which was in line with its previous dividend. The company has raised its dividends for six consecutive years, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 6.78%, as of September 11.
In addition to KMI, other dividend stocks gaining traction among investors include The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP).
At the end of Q2 2023, 36 hedge funds tracked by Insider Monkey reported having stakes in Kinder Morgan Inc. (NYSE:KMI), up from 35 in the previous quarter. The collective value of these stakes is nearly $891 million. With roughly 18 million shares, Orbis Investment Management was the company's leading stakeholder in Q2.
AbbVie Inc. (NYSE:ABBV) is a global pharmaceutical company that focuses on the research, development, and commercialization of a wide range of innovative healthcare products. Not only has the company raised its dividends by 12.34% in the past five years on average, but it also maintains a 50-year streak of consistent dividend growth. It currently offers a quarterly dividend of $1.48 per share and has a dividend yield of 3.97%, as of September 11.
As of the close of Q2 2023, 74 hedge funds tracked by Insider Monkey owned investments in AbbVie Inc. (NYSE:ABBV), compared with 75 in the previous quarter. The consolidated value of these stakes is over $2.37 billion.
Carillon Tower Advisers mentioned AbbVie Inc. (NYSE:ABBV) in its Q2 2023 investor letter. Here is what the firm has to say:
“AbbVie Inc. (NYSE:ABBV) reported mixed first-quarter results, which included disappointing revenue for two important products that are expected to drive new growth for the firm. We believe the source of weakness is temporary and remain bullish on the long-term future for both products.”
Citizens Financial Group, Inc. (NYSE:CFG) is an American financial services company that provides a wide range of banking and financial products and services to individuals and businesses. The company offers a quarterly dividend of $0.42 per share and has a dividend yield of 6.08%, as recorded on September 11. It has raised its dividend by 13.55% over the past five years, which places it as one of the best dividend stocks on our list.
The number of hedge funds tracked by Insider Monkey owning stakes in Citizens Financial Group, Inc. (NYSE:CFG) grew to 46 in Q2 2023, from 42 in the previous quarter. The consolidated value of these stakes is over $491.4 million. Among these hedge funds, Millennium Management was the company's leading stakeholder in Q2.
12. The PNC Financial Services Group, Inc. (NYSE:PNC)
5-Year Average Dividend Growth: 13.59%
Number of Hedge Fund Holders: 52
An American financial services company, The PNC Financial Services Group, Inc. (NYSE:PNC) is next on our list of the best dividend stocks with strong growth. The company's 5-year average dividend growth stands at 13.59% and it has raised its payouts for 13 consecutive years. It offers a quarterly dividend of $1.55 per share and has a dividend yield of 5.25%, as of September 11.
As of the close of Q2 2023, 52 hedge funds in Insider Monkey's database were bullish on The PNC Financial Services Group, Inc. (NYSE:PNC). The stakes owned by these funds have a total value of nearly $630.6 million. Balyasny Asset Management was the company's leading stakeholder in Q2.
T. Rowe Price Group, Inc. (NASDAQ:TROW) is a Maryland-based investment management company that provides a range of financial services and investment products to its consumers. On August 1, the company announced a quarterly dividend of $1.22 per share, consistent with its previous dividend. It is one of the best dividend stocks on our list with 37 years of dividend growth streak under its belt. As of September 11, the stock has a dividend yield of 4.43%.
At the end of Q2 2023, 24 hedge funds in Insider Monkey's database owned investments in T. Rowe Price Group, Inc. (NASDAQ:TROW), up from 21 in the previous quarter. The overall value of these stakes is over $309 million.
Fifth Third Bancorp (NASDAQ:FITB) is a regional bank holding company that operates as a diversified financial services organization, providing a range of banking and financial products to consumers. On September 10, the company announced a 6.1% hike in its quarterly dividend to $0.35 per share. This marked the company's 13th consecutive year of dividend growth, which makes it one of the best dividend stocks on our list. The stock's dividend yield on September 11 came in at 4.98%.
At the end of June 2023, 39 hedge funds in Insider Monkey's database owned stakes in Fifth Third Bancorp (NASDAQ:FITB), down from 44 a quarter earlier. The collective value of these stakes is roughly $500 million.
A regional bank company, Regions Financial Corporation (NYSE:RF) is next on our list of the best dividend stocks for growth. In the past five years, the company has raised its dividends by 15.42% on average. The company currently pays a quarterly dividend of $0.24 per share, having raised it by 20% in July this year. This marked the company's 12th consecutive year of dividend growth. The stock has a dividend yield of 5.34%, as of September 11.
The number of hedge funds in Insider Monkey's database owning stakes in Regions Financial Corporation (NYSE:RF) stood at 29 in Q2 2023, which remained unchanged from the previous quarter. The consolidated value of these stakes is nearly $251 million.
Best Buy Co., Inc. (NYSE:BBY) is a consumer electronics company, based in Minnesota. On August 30, the company declared a quarterly dividend of $0.92 per share, raising it by 5% in March this year. Through this increase, the company took its dividend growth streak to 10 years, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 5.07%, as of September 11.
According to Insider Monkey's database of Q2 2023, 31 hedge funds owned stakes in Best Buy Co., Inc. (NYSE:BBY), with a collective value of over $356.5 million. With over 1.1 million shares, Citadel Investment Group was the company's leading stakeholder in Q2.
Cintas Corporation (NASDAQ:CTAS) is an American business services company that provides a wide range of products and services related to corporate uniforms, workplace safety, and facility services. In the past five years, the company has raised its dividends by 24.2% on average and maintains a 40-year streak of consistent dividend growth. The company's current quarterly dividend stands at $1.35 per share which offers a dividend yield of 1.08%, as of September 11.
Of the 910 hedge funds tracked by Insider Monkey at the end of Q2 2023, 40 funds owned stakes in Cintas Corporation (NASDAQ:CTAS), up from 39 in the previous quarter. The overall value of these stakes is over $1.36 billion. Among these hedge funds, Impax Asset Management was the company's largest stakeholder in Q2.
Zoetis Inc. (NYSE:ZTS) is a global animal health company that specializes in the discovery, development, manufacturing, and marketing of a wide range of veterinary medicines and vaccines. The company currently pays a quarterly dividend of $0.375 per share and has a dividend yield of 0.81%, as recorded on September 11. In the past five years, it raised its dividends at an annual average rate of 24.5%, which makes it one of the best dividend stocks on our list.
The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) are some other dividend stocks to consider for growth.
Zoetis Inc. (NYSE:ZTS) was a popular buy among elite funds with 65 hedge fund positions at the end of Q2 2023, up from 55 in the previous quarter, as per Insider Monkey's database. The consolidated value of stakes owned by these hedge funds is over $1.1 billion.
