In this article, we will discuss the best dividend stocks with dividend growth.
Dividend stocks have been attracting increasing interest lately, particularly following the tech sector’s sharp decline in March. While technology companies have been gaining excessive popularity in recent years, the market correction served as a reminder that rapid gains can quickly be erased. In contrast, dividend-paying stocks embody the principle of steady, consistent growth. Although they may not generate the same level of excitement, they tend to offer long-term benefits, especially for investors seeking a reliable source of income.
Bryan Armour, Morningstar’s director of passive strategies, noted that the recent market volatility offers a chance to refocus on fundamental principles. Here are some comments from the analyst:
“With US stocks as a percentage of portfolios at one of the highest levels ever, this is an excellent time for a more diversified portfolio. That’s not to say to sell US stocks, but to diversify into bonds and international stock exposure. We don’t know what’s going to happen, so don’t try to guess. Just hold a diversified portfolio and live to fight another day. Be boring.”
Armour further suggested that investors looking for a safer option might consider exchange-traded funds that invest in companies with a track record of increasing their dividends.
A report by BNY Investments also suggested that with inflationary pressures and market volatility expected to persist into 2025, a dividend-focused strategy could be beneficial. Dividends were highlighted as a potential hedge against inflation while also providing a more stable income stream, making them a crucial element in navigating uncertain market conditions. The report further noted that the opportunity set within the broader market had expanded, as more high-growth sectors—particularly information technology, health care, and industrials—had increasingly embraced dividend payments. As of September 2024, approximately 80% of companies in the wider market were paying dividends, with the technology sector accounting for 24% of those, a notable rise from 13% a decade earlier. This trend underscored the idea that growth and income generation could coexist.
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When it comes to dividend investing, stocks with consistent dividend growth are the top choice among investors. A Morningstar report indicates that over the past five years, these stocks have outperformed those offering higher yields in the equity market. The BNY Investments report highlighted that companies that pay and consistently increase dividends tend to demonstrate greater resilience during market downturns, as investors often turn to them for stability in uncertain conditions. These companies also have the capacity to raise dividend payouts in line with or even above inflation, making them particularly attractive to income-focused investors.
In an environment of low interest rates, where bond yields offer limited appeal, dividend-paying stocks have the potential to become even more compelling. With inflation remaining above pre-pandemic levels and possibly rising further, these stocks can serve as an effective hedge, adding to their attractiveness. The report further emphasized that dividends continue to play a crucial role in managing market volatility while providing a steady income stream and protection against inflation. Given this, we will take a look at some of the best dividend stocks with dividend growth.
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Our Methodology
For this article, we looked at dividend stocks in the broader market 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. The stocks are ranked in ascending order of their annual average dividend growth in the past five years.
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10. Abbott Laboratories (NYSE:ABT)
5-Year Average Dividend Growth Rate: 11.15%
Abbott Laboratories (NYSE:ABT) is an Illinois-based medical device company that provides services and products in diagnostics, nutrition, and established pharmaceuticals. In the fourth quarter of 2024, the company reported $11 billion in revenue, reflecting a year-over-year increase of more than 7%. However, this figure fell short of analysts’ expectations by over $57 million. Despite the revenue miss, the company demonstrated solid growth throughout the year.
For the full year, Abbott Laboratories (NYSE:ABT) reached the upper range of its initial January projections for both organic sales growth and adjusted earnings per share. Throughout 2024, the company launched more than 15 growth initiatives supported by its strong R&D efforts. These included a mix of newly approved products and expanded treatment indications.
Abbott Laboratories (NYSE:ABT) continues to drive innovation by regularly introducing and marketing advanced products, with a portfolio that features numerous patented devices generating stable sales. Its diversified business model helps mitigate risks by reducing reliance on any single segment. Since the start of 2025, the stock has surged by nearly 12%.
On February 21, Abbott Laboratories (NYSE:ABT) announced a quarterly dividend of $0.59 per share, maintaining its previous payout. The company has a strong track record in dividend growth, having increased its payouts for 53 consecutive years. Moreover, it has raised its dividends at an annual average rate of over 11%, which makes it one of the best dividend stocks for dividend growth. The stock has a dividend yield of 1.86%, as of March 26.
9. McKesson Corporation (NYSE:MCK)
5-Year Average Dividend Growth Rate: 11.17%
McKesson Corporation (NYSE:MCK) is an American healthcare company headquartered in Texas. The company specializes in pharmaceutical distribution and offers health information technology, medical supplies, and health management solutions. It plays a crucial role in the US pharmaceutical industry, supplying medications to healthcare providers and retailers. Its core revenue streams come from distributing branded, generic, and specialty drugs. Additionally, its Prescription Technology Solutions segment focuses on improving medication access and affordability.
In the fiscal third quarter of 2025, McKesson Corporation (NYSE:MCK) reported an 18% increase in revenue, reaching $95.3 billion, while adjusted operating profit rose 16% to $1.5 billion. However, revenue fell slightly short of Wall Street’s projection of $96.08 billion, partly due to weaker-than-expected sales in its US pharmaceutical segment.
Following its strong performance, McKesson Corporation (NYSE:MCK) raised its full-year adjusted EPS guidance to a range of $32.55 to $32.95, representing an annual growth of 19% to 20%. The company remains committed to delivering value to shareholders, returning $3.1 billion in the first nine months of 2024, including $254 million in dividends. Its quarterly dividend comes in at $0.71 per share and has a dividend yield of 0.43%, as recorded on March 26. MCK is one of the best dividend stocks, as the company has raised its dividends for eight consecutive years.
