Stock (ticker) | 3-Year Avg. Ann. Dividend Growth |
---|---|
27.1% | |
19.4% | |
17.4% | |
17.1% | |
15.2% | |
14.6% | |
14.6% | |
13.2% | |
13.0% | |
11.3% |
Updated: Jul 1, 2024, 3:16pm
There’s more than one way to invest in dividend stocks. For one thing, you can aim for stocks that pay high dividends. Another tack is to opt for equities whose dividends are likely not the highest on the market but have been steady through good times and bad and appear reliable. A third approach is to seek stocks whose dividends are growing. This third group is often referred to as dividend growth stocks.
To help you uncover companies that are sustainably growing dividends, Forbes Advisor has curated this list of 10 stocks with exceptional annual dividend growth. As a bonus, these companies are also increasing earnings, which means they are likely to continue boosting their dividends for years to come.
10 Best Dividend Growth Stocks of August 2024
Methodology
Our list of the best dividend growth stocks is built using strict criteria. It aims to uncover companies that have grown dividends the most over the past three years. In addition, each company must have positive earnings performance over recent years and forecasted EPS growth. Only 15 U.S. stocks met our criteria.
The top 10 selection was based on the highest dividend growth over the last three years, plus the following criteria at the time of our initial screening:
- Trading volume and price. Each stock trades on a major U.S. stock exchange, is priced above $5 and trades at least 200,000 shares per day on average.
- Double-digit dividend growth. Each stock on the list has increased dividends by an average of at least 12% per year over the last five years.
- Sustained dividend growth. All the companies must have raised dividends for at least five years in a row.
- High forecasted earnings growth. To increase the likelihood that dividends will continue to grow in the future, analysts expect earnings to grow by at least 8% per year over the next five years and, except for one stock, at least 8% in the current year.
- Stable profits. Each company must have positive earnings for the last four years.
- Substantial dividend. All stocks on the list have a dividend yield of at least 1% and a shareholder yield of at least 1%, which eliminates companies issuing shares—which dilutes shareholders—to pay dividends.
In addition to finding stocks with growing dividends, this methodology also attempts to avoid common traps such as companies that raise dividends but can’t afford it, or that have falling earnings so they may not be able to afford dividends or dividend increases in the future.
Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.
What Are Dividend Growth Stocks?
Dividend growth stocks come from companies that raise their payouts every year over the long term. These sorts of dependable increases are a sign of financial health. They can also help you build a portfolio with sustained high dividend yields, something you don’t always get from stocks with the highest possible yields at any given moment.
More often than not, sky-high dividend yields are not sustainable. But dividend growth stocks have the resources and stability to gradually increase their payouts—and your income—year after year. Sustained dividend growth doesn’t arrive out of the blue, it’s a sign that a company is expanding a healthy business and finding success.
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