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.
Photo by Vitaly Taranov on Unsplash
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.
8. Automatic Data Processing, Inc. (NASDAQ:ADP)
5-Year Average Dividend Growth Rate: 11.58%
Automatic Data Processing, Inc. (NASDAQ:ADP) is a New Jersey-based company that offers human resource management software and services. It focuses on technological innovation, global expansion, and outsourcing solutions. Recently, the company has prioritized AI-driven products and broadened its international presence. These initiatives are its key strategies, aimed at improving customer experience and operational efficiency.
In fiscal Q2 2025, Automatic Data Processing, Inc. (NASDAQ:ADP) reported an 8% year-over-year revenue increase, reaching $5.05 billion. Interest revenue from client funds also saw strong growth, rising 21% to $273 million, driven by higher balances and improved interest rates. These gains helped offset operational costs and reinforced the company’s financial stability.
Looking ahead, Automatic Data Processing, Inc. (NASDAQ:ADP) projects full-year revenue growth of 6% to 7% and expects to expand its adjusted EBIT margin by 30 to 50 basis points. The company maintains a solid financial position, ending the quarter with over $2.2 billion in cash and cash equivalents. During the first half of the fiscal year, operating cash flow rose to nearly $2 billion, up from $1.35 billion in the prior-year period.
Automatic Data Processing, Inc. (NASDAQ:ADP), one of the best dividend stocks, is a Dividend King, as the company maintains a 50-year streak of consistent dividend growth. In the past five years, the company has raised its payouts at an annual average rate of 11.58%. It offers a quarterly dividend of $1.54 per share for a dividend yield of 2.04%, as of March 26.
7. Costco Wholesale Corporation (NASDAQ:COST)
5-Year Average Dividend Growth Rate: 12.28%
Costco Wholesale Corporation (NASDAQ:COST) ranks seventh on our list of the best dividend stocks for dividend growth. The American retail company’s business model has proven resilient against inflationary pressures since going public in 1985, and it is expected to continue outperforming many of its industry rivals. The company’s ability to keep product prices low stems from its reliance on high-margin membership fees as its primary source of profit. In September 2024, it implemented its first membership fee increase in seven years. The stock has surged by over 27% since the start of 2025.
In fiscal Q1 2025, Costco Wholesale Corporation (NASDAQ:COST) reported revenue of $62 billion, marking a 7.5% increase year over year. Net income rose to $1.8 billion from $1.6 billion in the same period last year. The company maintained a strong liquidity position, closing the quarter with nearly $11 billion in cash and equivalents, up from $9.9 billion in the prior quarter. In addition, it generated $3.3 billion in operating cash flow.
Analysts remain optimistic about Costco Wholesale Corporation (NASDAQ:COST)’s prospects, citing its ability to gain market share and leverage its retail-as-a-service model, which ensures a steady stream of membership income. The company’s competitive edge lies in its bulk-discount pricing and membership-driven approach, which has fostered a loyal and expanding customer base, as reflected in its latest quarterly results.
Costco Wholesale Corporation (NASDAQ:COST) currently pays a quarterly dividend of $1.16 per share and has a dividend yield of 0.50%, as recorded on March 26. The company maintains a 20-year streak of dividend growth, and its 5-year average annual dividend growth stands at over 12%.
6. The Hershey Company (NYSE:HSY)
5-Year Average Dividend Growth Rate: 12.50%
The Hershey Company (NYSE:HSY) is a Pennsylvania-based multinational confectionery company that is known for its chocolates, snacks, and pantry items. The company has a strong track record of growth, expanding both through internal development and strategic acquisitions. Lately, it has been acquiring salty snack brands—such as Dot’s Pretzels—to diversify its offerings beyond chocolate and confectionery products. The stock is down by over 11% in the past 12 months due to high cocoa prices.
The Hershey Company (NYSE:HSY) expects that the sharp rise in cocoa prices will significantly impact its earnings in 2025. However, it remains committed to driving revenue growth and market share gains, executing its transformation and productivity initiatives, and positioning itself for long-term performance that outpaces its industry peers. In the fourth quarter of 2024, the company reported a revenue of $2.9 billion, which showed a nearly 9% growth from the same period last year. The revenue also beat analysts’ estimates by $45 million.
Net sales, on an organic and constant currency basis, grew by 9.0%. Acquisitions contributed a modest 0.2 percentage point boost to net sales, while currency fluctuations had a negative impact of 0.5 percentage points. The company’s reported net income reached $796.6 million, translating to $3.92 per diluted share, reflecting a 130.6% increase.
The Hershey Company (NYSE:HSY)’s cash position remained solid at the end of FY24, as it had approximately $731 million available in cash and cash equivalents, up from $402 million in 2023. It offers a quarterly dividend of $1.37 per share and has a dividend yield of 3.25%, as recorded on March 26. HSY is one of the best dividend stocks on our list as the company holds a 15-year track record of dividend growth.
5. Northrim BanCorp, Inc. (NASDAQ:NRIM)
5-Year Average Dividend Growth Rate: 13.88%
Northrim BanCorp, Inc. (NASDAQ:NRIM) is an Alaska-based bank holding company that provides various financial products and services, including checking and savings accounts, loans, mortgages, credit cards, investment services, treasury management, and online banking facilities.
Over the past year, Northrim BanCorp, Inc. (NASDAQ:NRIM) has climbed nearly 54%, driven by several key factors. The acquisition of Sallyport Commercial Finance, LLC on October 31, 2024, led to higher purchase receivable income, which in turn boosted the value of NRIM. In addition, a rise in mortgage banking income during the fourth quarter contributed to this growth, largely due to an increase in the fair value of a mortgage servicing portfolio acquired from another financial institution. At the end of the year, the company’s total assets surpassed $3 billion for the first time.
In its earnings report, Northrim BanCorp, Inc. (NASDAQ:NRIM) emphasized its commitment to profitable growth. Over the past five years, the company’s deposit market share in Alaska has risen from 11% to 16%, while loans and deposits have nearly doubled. Moreover, net interest income has grown by 60% during this period.
On January 27, Northrim BanCorp, Inc. (NASDAQ:NRIM) declared a 3.2% growth in its quarterly dividend to $0.64 per share. This marked the company’s 15th consecutive year of dividend growth. In the past five years, it has raised its payouts at an annual average rate of nearly 14%, which places it on our list of the best dividend growth stocks. As of March 26, the stock supports a dividend yield of 3.39%.
4. The Kroger Co. (NYSE:KR)
5-Year Average Dividend Growth Rate: 15.05%
The Kroger Co. (NYSE:KR) is an Ohio-based retail company that operates a network of supermarkets and multi-department stores across the US, with a strategy centered on a diverse retail model. Many locations incorporate pharmacies and fuel centers, enabling the company to attract a broad customer base while reducing dependence on any single revenue stream. Since the beginning of 2025, its stock has risen by over 6%, and its 12-month return came in at over 17%.
In the fourth quarter of 2024, The Kroger Co. (NYSE:KR) reported adjusted earnings per share of $1.14, matching the prior year’s figure and exceeding analysts’ expectations. Revenue came in at $34.3 billion, missing the projected $34.75 billion and reflecting a 7% decline from the same period a year earlier. Operating profit dropped by nearly 24% year over year. However, the company’s Alternative Profit Businesses, which include advertising and data services, contributed $1.35 billion in operating profit, supported by a 17% rise in media-related revenue. Digital sales increased by 11%, underscoring efforts to enhance the shopping experience. In addition, the introduction of more than 900 new products under the “Our Brands” portfolio reinforced its focus on private-label expansion to improve profit margins.
For the fiscal year 2024, The Kroger Co. (NYSE:KR) generated $5.8 billion in operating cash flow, strengthening its position as a reliable dividend payer. Over the year, the company distributed $883 million to shareholders through dividends. It offers a quarterly dividend of $0.32 per share, yielding 1.94%, as of March 26. Kroger has consistently increased its dividend payouts for the past 18 years, coming through as one of the best dividend stocks on our list.
3. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Average Dividend Growth Rate: 16.39%
Lowe’s Companies, Inc. (NYSE:LOW) ranks third on our list of the best dividend stocks for dividend growth. The North Carolina-based home improvement company operates more than 1,700 locations across the United States. Through its Total Home strategy, the company seeks to meet a wide range of customer needs by providing extensive services tailored to both DIY shoppers and professional contractors.
In recent efforts to strengthen its market position, Lowe’s Companies, Inc. (NYSE:LOW) has focused on several strategic priorities. These include expanding its digital footprint, optimizing supply chain efficiency, and enhancing customer engagement through technological improvements. By emphasizing an omnichannel approach that blends online and in-store experiences, the company aims to maintain profitability while offering a seamless shopping experience.
In the fourth quarter of 2024, Lowe’s Companies, Inc. (NYSE:LOW) reported revenue of $18.55 billion, marking a slight year-over-year decline of 0.2%. Comparable sales edged up by 0.2%, driven by strong performance in the Pro and online segments, a successful holiday season, and rebuilding efforts following hurricane damage. However, discretionary spending pressures in the DIY segment partially offset these gains.
Lowe’s Companies, Inc. (NYSE:LOW) maintained a strong cash position, closing the quarter with nearly $1.8 billion in cash and equivalents—an increase from $921 million the previous year. For FY24, the operating cash flow rose to $9.7 billion, up from $8.1 billion a year earlier. Throughout the year, Lowe’s returned $6.5 billion to shareholders through dividends and share buybacks. The company has consistently increased its dividend payouts for 59 consecutive years. Currently, it offers a quarterly dividend of $1.15 per share and has a dividend yield of 1.98%, as of March 26.
2. Morgan Stanley (NYSE:MS)
5-Year Average Dividend Growth Rate: 21.84%
Morgan Stanley (NYSE:MS) is an American multinational financial services company that offers a wide range of related services to its consumers. The company’s quarterly dividend sits at $0.925 per share and has a dividend yield of 3.30%, as of March 26. It has remained committed to its shareholder commitment, returning $150 million in Q4 to investors through dividends. In addition, Morgan Stanley (NYSE:MS) has raised its payouts at an annual average rate of nearly 22% in the past five years.
On March 14, Morgan Stanley Infrastructure Partners (MSIP) announced that it had raised $4.1 billion for its latest fund, North Haven Infrastructure Partners IV. The fund is backed by leading institutional investors, including pension funds and sovereign wealth funds. With nearly two decades of experience, MSIP focuses on investing in critical infrastructure such as transportation, digital networks, energy transition, and utilities, aiming to generate long-term value and stable, inflation-protected returns.
In the fourth quarter of 2024, Morgan Stanley (NYSE:MS) reported a revenue of $16.2 billion, marking a 25% increase from the previous year. Net income climbed to $3.7 billion, or $2.22 per diluted share, compared to $1.5 billion, or $0.85 per share, in the same quarter last year. Wealth and Investment Management’s total client assets reached $7.9 trillion, supported by strong market performance and continued net inflows. The company remains focused on its Integrated Firm model, prioritizing strategy, culture, financial strength, and growth to drive long-term shareholder value.
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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