9 Best Dividend Growth Stocks of 2024

Written by
Last Update:
February 13, 2024
Reviewed by
Rob Koyfman

The premise of a dividend growth stock is simple; they are companies that can comfortably pay dividends to their shareholders and grow the dividend per share annually. The number of US companies that have been able to sustain dividend growth by paying consecutive annual dividend increases for more than 20 years is just 146. There are only 75 who have managed this feat for 30 years, and just 26 who have done so for more than 50 years. While some companies pay a considerably high dividend yield, investors seek out dividend-growth stocks because of their consistency. Thus, there is less focus placed on outright yield and more emphasis on durability. A dividend can’t compound if it’s stopped in its tracks.

PRO TIP:

When searching for dividend growth stocks, focus on the following attributes to find companies likely to provide consistent returns:

    1. Dividend Streak: Focus on companies with a history of increasing dividends for more than 10 years.
    2. Payout Ratio: Ensure the payout ratio is sustainable, ideally at or below 100%.
    3. Dividend Growth: Confirm a strong history of growing dividends, with a CAGR of over 3.5% across a decade.
    4. Profitability Metrics: Look for companies with an EBIT margin and a net income margin both in positive territory, reflecting operational and overall profitability.
    5. Growth Projections: Consider companies with projected EPS and revenue growth of more than 3.5% annually over the next three years.
    6. Revenue Trends: Check for a total revenue CAGR of more than 5% over the last five years, indicating consistent growth.

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9 Best Dividend Growth Stocks of February 2024

Name

Ticker

10Y Dividend CAGR

Dividend Streak

Starbucks Corporation

SBUX

17.11%

13

Moody's Corporation

MCO

15.90%

15

The Sherwin-Williams Company

SHW

13.76%

45

S&P Global Inc.

SPGI

12.38%

51

Microsoft Corporation

MSFT

11.45%

19

The Hershey Company

HSY

9.43%

15

PepsiCo Inc.

PEP

8.24%

52

Church & Dwight Co. Inc.

CHD

6.89%

13

Waste Management Inc.

WM

6.24%

21

*Data as of February 13th, 2024

Investing in dividend growth stocks isn’t just about choosing the right ones; it’s crucial to keep monitoring them regularly. Watch the overall market because it can change how your stocks do. Also, watch for any changes in how the companies handle their dividends. This can tell you a lot about how stable the company is financially.

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Starbucks Corporation (SBUX)

Starbucks is the world’s largest coffee franchise with more than 37,000 stores across North America (17,592), China (6,480), and the rest of the world (13,150). The company has paid consecutive annual dividend increases for more than 13 years and currently yields 2.4% or $0.57 per share. The global coffee enterprise is a cash generation machine, pumping out more than enough free cash flows and earnings to cover its dividends. Over the last 10 years, the dividend has increased by an annualized 17.1% each year.

Over time, Starbucks has shown how important paying their dividend is to them. This was illustrated during the pandemic when, for an entire year, cash flows were no longer able to support the dividend. Ordinarily, this would spell trouble for a dividend growth stock, and during the pandemic many companies halted or reduced their dividend to shore up liquidity. Instead, Starbucks halted share repurchases and committed to paying their shareholders.

The growth prospects for Starbucks look promising too. While there may be an argument for saturation in their domestic market, the company’s second-largest market, China, has decades of growth ahead. China, a market where Starbucks operates 100% of the stores itself, captures much of the attention these days, as it stands to be the company’s largest growth vector going forward. The company is eyeing 45,000 stores across the world in the coming years, most of which will come from China’s growth. SBUX is also featured in our best food stocks article, offering more insights on Starbucks within the food sector.

Key Investment Insights for Starbucks Corporation (SBUX):

Market Cap:

$108.09 billion

Focus:

Coffee

Dividend Yield:

2.39%

Dividend Streak:

13

Payout Ratio:58.96

%

10Y Dividend CAGR:

17.11%

The Sherwin-Williams Company (SHW)

The Sherwin-Williams Company specializes in the manufacture and distribution of paints, coatings, and related products to retail, professional, commercial, and industrial customers. Through its three operation segments (Americas, Consumer Brands, and Performance Coatings), SHW offers products that range from architectural paints and coatings, protective and marine products, OEM finishes, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks, adhesives, and more. They have been in this business since 1866.

They also have an extensive history of annual dividend increases, highlighting their commitment to consistent dividend growth, stretching back 45 years so far. In the last decade, their dividend has grown by an annualized 13.8% per year. While the dividend yield might be one of the lowest on our list, at just 0.8%, the growth rate has been phenomenal, and the potential to further this dividend growth remains strong. At present, SHW has a payout ratio of just 30.6%, meaning the dividend is well covered.

Key Investment Insights for The Sherwin-Williams Company (SHW):

Market Cap:

$79.46 billion

Focus:

Paints

Dividend Yield:

0.78%

Dividend Streak:

45

Payout Ratio:

30.62%

10Y Dividend CAGR:

13.76%

Moody’s Corporation (MCO)

Home to Moody’s Investors Service and Moody’s Analytics, MCO is an integral part of the financial industry; most commonly known for publishing credit ratings and providing assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations.

Founded in 1900, Moody’s has proven its ability to survive every recession it has faced. Part of this is due to its impressive moat and the fact that its services are so important to the industry. Moody’s has paid a dividend since the year 2000 and has gone 15 years in a row for consecutive dividend hikes. Currently yielding 0.77%, MCO pays investors $0.77 per share, and has grown its dividend by an annualised 15.9% over the last decade. The payout ratio, of 37.5%, is also well covered.

Moody’s has one of the strongest margin structures on our list, with gross margins above 70% and 35% EBIT margins.

Key Investment Insights for Moody’s Corporation (MCO):

Market Cap:

$73.4 billion

Focus:

Credit Ratings and Services

Dividend Yield:

0.77%

Dividend Streak:

15

Payout Ratio:

37.48%

10Y Dividend CAGR:

15.9%

S&P Global Inc. (SPGI)

Another business that is an integral part of the financial system, is S&P Global. SPGI operates in similar fields to Moody’s and also provides credit ratings, benchmarks, analytics, and workflow solutions in the global capital markets. Founded in 1860, S&P Global has been hiking its dividends annually for more than 51 years! Over the last ten years, the dividend has grown at an annualized 12.4% per year and currently pays investors a yield of 0.85%.

With both S&P Global and Moody’s, investors received a modest dividend, but one characterized by consistent dividend growth, comfortability due to their parent’s high margins and meaty business practices, and the prospect of attractive returns.

Key Investment Insights for S&P Global Inc. (SPGI):

Market Cap:

$134.92 billion

Focus:

Credit Ratings&Benchmarks

Dividend Yield:

0.85%

Dividend Streak:

51

Payout Ratio:43

.68%

10Y Dividend CAGR:

12.38%

Microsoft Corporation (MSFT)

Almost every human with a computer has touched a Microsoft product in their lifetime. Whether it’s the hardware or software, Microsoft has had to reinvent itself many times over during its lifespan. More recently, the company has begun to build out an impressive Cloud business, as well as demonstrating a desire to get ahead of the curve with their investments into AI, such as the acquisition of OpenAI, or their partnerships with Meta.

Having consecutively raised annual dividends for 19 years, Microsoft has the lowest payout ratio on our list thanks to its fat margins and incredible cash flow. The dividend yield is on the smaller side, at just 0.72%, but comes with the benefit of owning one of the world’s largest and most powerful technology companies.

Key Investment Insights for Microsoft Corporation (MSFT):

Market Cap:

$3,085.56 billion

Focus:

Software

Dividend Yield:

0.72%

Dividend Streak:

19

Payout Ratio:

27.36%

10Y Dividend CAGR:

11.45%

The Hershey Company (HSY)

The Hershey Company is one of the world’s largest confectionery businesses, selling their chocolates, snacks, and other consumer packaged goods across the world. A handful of their brands include: Hershey’s, Reese’s, Kisses, Jolly Rancher, Almond Joy, Brookside, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily’s, SkinnyPop, Pirates Booty, Paqui, and Dot’s Homestyle Pretzels.

The company boasts a dividend growth track record with 15 years of consecutive annual dividend hikes. With a yield of 2.5%, it plans to stretch that tally for years to come. Interestingly, despite no major changes to the businesses, sentiment has turned sour for Hershey’s more recently, and other “non-healthy” snacking CPG companies because of the rise of various weight loss drugs in the US. Some investors’ fear that demand will fall for these goods in the coming decade.

After falling 35% from their previous high, and more than 15% YTD, Hershey now trades at a forward PE ratio of ~19x, which places it in the bottom quartile relative to its own 20-year history. If you believe the fears are overblown, now could be the time to make a contrarian trade in the CPG industry.

Key Investment Insights for The Hershey Company (HSY):

Market Cap:

$39.62 billion

Focus:

Chocolate

Dividend Yield:

2.46%

Dividend Streak:

15

Payout Ratio:

47.12%

10Y Dividend CAGR:

9.43%

Church & Dwight Co. Inc. (CHD)

Church & Dwight Co., Inc., a renowned manufacturer of household and personal care products, offers a broad spectrum from baking soda goods to animal productivity supplements. It’s carved out a significant market share via innovative products and astute acquisitions, such as THERABREATH and Hero. The company’s strategic focus on both premium and value brands has fueled robust consumer demand and improved case-fill rates, thus driving substantial revenue growth.

The company currently pays a dividend yield of 1.15% and has knocked up a 13-year period of consecutive annual dividend hikes

Key Investment Insights for Church & Dwight Co. Inc. (CHD):

Market Cap:

$24.29 billion

Focus:

Personal Care

Dividend Yield:

1.15%

Dividend Streak:

13

Payout Ratio:35

.27%

10Y Dividend CAGR:6

.89%

PepsiCo Inc. (PEP)

PepsiCo is a dividend king, having paid consecutive annual dividend hikes for more than 52 years. The company is most known for its iconic Pepsi-Cola beverages but also owns Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, Aquafina, Emperador, Diet Mountain Dew, Diet Pepsi, Gatorade Zero, Propel, Marias Gamesa, Ruffles, Sabritas, Saladitas, Tostitos, 7UP, Diet 7UP, H2oh!, Manzanita Sol, Mirinda, Pepsi Black, San Carlos, Toddy, Walkers, Chipsy, Kurkure, Sasko, Spekko, White Star, Smith’s, Sting, SodaStream, Lubimy Sad, a large portion of Celsius Energy, and other brands.

Founded in 1898, Pepsi currently yields 3% and offers diversified exposure to the CPG industry across the world. More recently, the company has shown pricing power, managing to increase revenues while volumes weaken during a global inflationary period.

Key Investment Insights for PepsiCo Inc. (PEP):

Market Cap:

$234.49 billion

Focus:

Consumer Packaged Goods

Dividend Yield:2

.97%

Dividend Streak:

52

Payout Ratio:73

.64%

10Y Dividend CAGR:8

.24%

Waste Management Inc. (WM)

One investor’s trash is another’s treasure. Waste Management has been in the business of trash collection since 1987 and operates across the US and Canada delivering services such as the collection, transportation, and recycling of waste materials, as well as landfill management. The company pays a dividend yield of 1.49% and has consecutively raised their dividend for more than 20 years.

While the 10Y CAGR is lower than some others on our list, at 6.2%, Waste Management operates the largest waste management business in the country with relatively little competition. While it’s hard to forecast which technologies will be most important to humans in twenty years, it’s reasonable to believe that we will still need our trash collected.

Key Investment Insights for Waste Management Inc. (WM):

Market Cap:

$75.83 billion

Focus:

Trash

Dividend Yield:

1.49%

Dividend Streak:

21

Payout Ratio:

48.12%

10Y Dividend CAGR:

6.24%

How To Find Top Dividend Growth Stocks

Step 1: Sign Up to Koyfin for Free. Register an account and get started; no credit card required. 

Step 2: Create a Screener. Head to ‘My Screens’, create a new screener and give it a name. 

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Step 3: Define your Investment Universe. Select a trading region, or multiple regions, and choose from a range of universe filters such as; country, ETF constituents, industry, sector, exchange, and description. 

Universe Criteria on Koyfin

Step 4: Add Filter Criteria. We have thousands of data points you can add to a screener. For a high-quality dividend screener, we recommend the following criteria, but you can make your own too: 

  • Dividend Streak: More than 10 years
  • Payout Ratio (LTM): A maximum of 100%
  • Dividend per share CAGR (10Y FY): More than 3.5%
  • EBIT Margin (LTM): More than 5%
  • Net Income Margin (LTM): More than 0%
  • Est EPS CAGR (3Y): More than 3.5%
  • Est Rev CAGR (3Y): More than 3.5%
  • Total Revenues CAGR (5Y FY): More than 5%

Filter Criteria on Koyfin

 Step 5: Create Screen. When you are happy with your screener, give it a name and hit save and apply. You can also save this screener output as a watchlist too.

Save screener as a watchlist on Koyfin

How to Create a Watchlist for Top Dividend Growth Stocks

Step 1: Sign Up to Koyfin for Free. Register an account and get started; no credit card required.  

Step 2: Create a Watchlist. Head to ‘My Watchlists’, create a new watchlist and give it a name. 

Step 3: Add Tickers. Click ‘Add Ticker’, then ‘Import Securities’, then copy and paste the below list of tickers. 

SBUX, SHW, MCO, SPGI, MSFT, HSY, CHD, PEP, WM

Step 4: Customize Columns. Hit the ‘Columns’ icon to add and remove columns from your watchlist table. 

We have thousands of data points you can add to a watchlist, including fundamental data, price and returns data, analyst estimates, percentile ranks, security information, portfolio tools, and the ability to create your own formulas and labels. 

Now your watchlist is ready, and you can use the rest of the Koyfin terminal to track and analyze these stocks.

Customize Columns on Koyfin

 

 

FAQ

  • What is a dividend?

    A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares. It represents a portion of the company’s profits distributed to stockholders, typically on a regular basis.

  • What are dividend growth stocks?

    Dividend growth stocks are shares in companies that consistently increase the amount they return to shareholders in the form of dividends. These companies usually have a track record of generating steady profits, and rather than reinvesting all of these profits back into the business, they give a portion back to shareholders. Investors favor these stocks because they provide both the potential for capital appreciation and a growing income stream over time.

     

  • What are the risks associated with investing in dividend stocks?

    Dividend Cuts: Not all companies sustain their dividends. They can reduce or halt their dividends if they face financial challenges.

    Market Volatility: Like all stocks, dividend stocks are subject to the ups and downs of the market, which can affect their prices.

    Interest Rate Changes: Generally, when interest rates rise, high-yielding assets like dividend stocks may become less attractive, leading to potential price declines.

    Overvaluation: Some dividend stocks may become overpriced, especially if they are popular. Overvalued stocks have a higher risk of price correction.

    Economic Factors: Broader economic downturns or sector-specific challenges can impact a company’s profitability and its ability to pay dividends.

    Tax Implications: Depending on where you live, dividends may be taxed at different rates than other types of income or capital gains.

    Lack of Reinvestment: Companies that pay out a significant portion of their profits as dividends might be investing less in their own growth, which could impact future profitability.

    Sector Concentration: Dividend-paying stocks can sometimes be concentrated in certain sectors. Overexposure to one sector can bring additional risks.

     

  • How can I track the performance of these dividend-growth stocks?

    Koyfin offers a stock screener where you can set criteria to pinpoint stocks that align with your preferences. Moreover, you can utilize the Koyfin terminal for in-depth tracking and analysis of these stocks.

  • Can I expect these stocks to continue growing their dividends in the future?

    While these companies have shown dividend growth in the past, there are no guarantees for the future. It’s crucial to review each company’s financials, industry trends, and potential challenges before making investment decisions.

Editorial note

Our insights are derived solely from historical information and analyst predictions, employing an impartial approach. Please note that our articles do not serve as financial guidance.

Conor MacNeil is a financial analyst and investor. As the founder and sole contributor to ‘Investment Talk,’ he delivers insightful market commentary, and critical analysis of unfolding global events. To stay connected with Conor, follow him or send him a direct message on Twitter @InvestmentTalkk.