3 Dividend Growth Stocks Worth Buying and Holding for the Long Haul

Unlock stock picks and a broker-level newsfeed that powers Wall Street.

Chris MacDonald

Tue, Sep 5, 2023, 6:52 PM 3 min read

Following July’s market peak, stocks face significant pressure with 10-year Treasury yields at levels unseen since the financial crisis. Consequently, investors have a higher-yield, lower-risk alternative than dividends. Nevertheless, dividend stocks prove more rewarding over time, especially dividend growth stocks that bring increased dividends and capital growth.

Select stocks boost dividends yearly as profits rise. These stable dividends aid portfolio growth and retirement income. Key is well-managed firms with strong finances for sustained dividends. Here are the sole three dividend growth stocks you should add to your portfolio today.

Fortis (FTS)

Miniature house and symbols of public utilities.

Source: Andrii Yalanskyi / Shutterstock

In the realm of utilities, Fortis Inc (NYSE:FTS) shines. Recently, its earnings report for the quarter ending May 3rd impressed, solidifying leadership. Fortis reported C$0.91 in earnings per share, surpassing estimates of C$0.82 by C$0.09, showcasing exceptional performance. Notably, the company achieved a 12.85% net margin and 7.28% return on equity.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

The firm introduced a 5-year C$22.3 billion capital plan, foreseeing 6.2% annual rate base growth and a 4-6% dividend target. Utilities, like Fortis, maintain stable dividends despite earnings drops. Fortis sustains steady growth, with 50 years of dividend increases due to regulated operations, ensuring steady cash flow. Its consistent 5% annual bottom line growth over a decade brings less volatility than growth stocks.

Fortis sustains a payout ratio at 70%, a priority for management, projected for safety and growth. Notably, it stands out due to its size and U.S. exposure, securing revenue from strategic utility acquisitions.

Realty Income (O)

realty income logo highlighted by a magnifying glass on a web browser

Source: Shutterstock

Realty Income (NYSE:O) currently trades near its 52-week low at $56.56, 20% below its high. The stock is steady in 2023, down about 12% year to date (YTD). It’s the fifth-largest holding is JPMorgan Realty Income ETF (NYSEARCA:JPRE), which has declined over 20% in five years.

Recently, Realty Income invested $950 million in Bellagio Las Vegas Resort, a joint venture with Blackstone Real Estate Income Trust (NYSE:BREIT). This partnership gives Realty Income 22% ownership through $300 million equity contribution and $650 million interest-bearing preferred equity interest.

Realty Income, a major REIT, holds 13,100+ properties across 85 industries, focusing on the U.S. and international expansion. The diverse portfolio features strong operators, suited for monthly dividend coverage. With 53 years of continuous dividends and 121 increases since 1994, it offers both high yield and consistency.

Restaurant Brands (QSR)

A photo of a Burger King light-up sign outside a Burger King restaurant representing QSR stock.

Source: Savvapanf Photo / Shutterstock.com

Restaurant Brands’ (NYSE:QSR) impressive performance continued, with a 9.7% Q1 revenue rise year over year (YOY), and a 10% surge in global comparable sales. The company’s adjusted EBITDA grew by 15.6% to $588 million. Restaurant Brands is an appealing growth investment, combining share price growth, rising dividends, community involvement, and environmental commitment. Its global market presence and operational enhancements make it a promising long-term option for retirement portfolios.

Restaurant Brands prioritizes menu innovation, digital progress, and operational improvements for growth. The Reclaim the Flame initiative aims to enhance the U.S. guest experience and sales. It’s a top pick and significant portfolio position due to growth potential and investor interest.

With a 2.9% dividend yield, it offers defensive growth, income, and value. The fact that QSR stock is trading near its all-time high in times like these indicates just how defensive many investors view this name. I’m in that boat – it’s my largest holding.

On the date of publication, Chris MacDonald has a LONG position in QSR The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.