10 Best S&P 500 Stocks to Buy For Dividend Growth

1. Tractor Supply Company (NASDAQ:TSCO)

5-Year Average Dividend Growth Rate: 26.02%

Tractor Supply Company (NASDAQ:TSCO) is a Tennessee-based farm supplies company that sells home improvement and related equipment and supplies. The company has strengthened its presence in the pet care industry with the acquisition of Allivet, a pet pharmacy business. With over 200 pet stores under the Petsense brand and a wide range of pet products available at its Tractor Supply locations, the acquisition provides an additional growth opportunity, albeit at a measured pace.

In the fourth quarter of 2024, Tractor Supply Company (NASDAQ:TSCO) reported net sales of approximately $3.8 billion, reflecting a 3% increase from the previous year. This growth was driven by new store openings and an improvement in comparable store sales. Earnings per share (EPS) for the quarter stood at $0.44, representing a slight 3% decline year over year. However, both net sales and EPS came in slightly below expectations. Gross profit increased by 2.8% to $1.33 billion, up from $1.29 billion in the same period last year.

Tractor Supply Company (NASDAQ:TSCO) maintained a strong cash position, closing the quarter with approximately $252 million in cash and cash equivalents. For 2024, the company generated $1.4 billion in operating cash flow, allowing it to return $472.5 million to shareholders through dividends.

Tractor Supply Company (NASDAQ:TSCO) recently announced that its Board of Directors approved a $0.04 increase in its annual dividend, representing a 4.5% year-over-year rise, bringing the total to $0.92 per share for the fiscal year 2025. Following this adjustment, the Board also declared a quarterly cash dividend of $0.23 per share for its common stock. This marks the 16th consecutive year of dividend growth for the company. The stock supports a dividend yield of 1.71%, as of March 26.

Overall, Tractor Supply Company (NASDAQ:TSCO) ranks first on our list of the best dividend stocks for dividend growth. While we acknowledge the potential of TSCO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than TSCO but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.

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