10 Best Dividend Growth Stocks to Buy and Hold in 2025

8. A. O. Smith Corporation (NYSE:AOS)

5-Year Annual Dividend Growth Rate: 8.01%

A. O. Smith Corporation (NYSE:AOS) is a Wisconsin-based manufacturing company that specializes in residential and commercial water heaters for its consumers. In November, the company finalized its purchase of Pureit, a business previously owned by Unilever PLC, for roughly $120 million. This acquisition supports the company’s growth strategy by expanding its premium water treatment product range and strengthening its distribution network.

A. O. Smith Corporation (NYSE:AOS) reported mixed earnings in the third quarter of 2024. It posted revenue of $902.6 million, which showed a 3.7% decline from the same period last year. The revenue decline was attributed to reduced sales in China and lower water heater volumes in North America. Net earnings totaled $120 million, marking an 11% drop. Sales in China and water heater volumes in North America fell short of expectations during the third quarter. Weak consumer demand in China, along with reduced pre-buy activity and softened order demand driven by lead times in North America, continued throughout the quarter, resulting in lower-than-anticipated sales and profitability.

That said, A. O. Smith Corporation (NYSE:AOS) grabbed investors’ attention because of its strong cash position and solid dividend history. In the first nine months, the company generated nearly $360 million in operating cash flow and its free cash flow for the period came in at $282.5 million. On October 8, the company declared a 6% increase in its quarterly dividend to $0.34 per share. This marked the company’s 32nd consecutive year of dividend growth, which makes AOS one of the best dividend aristocrat stocks on our list. The stock offers a dividend yield of 1.99%, as of December 29.

As of the close of Q3 2024, 29 hedge funds in Insider Monkey’s database owned stakes in A. O. Smith Corporation (NYSE:AOS), compared with 33 in the previous quarter. The consolidated value of these stakes is more than $1 billion.