10 Magnificent Dividend Growth Stocks to Invest In

In this article, we will take a look at some of the best dividend aristocrat stocks to buy now.

Dividend stocks remain a popular choice among investors due to their ability to generate steady income. Experienced investors, including Warren Buffett, have long recognized their value, as evidenced by the significant presence of dividend-paying stocks in his portfolio. While often underestimated, dividends have played a crucial role in overall investment returns. Between 1960 and the end of last year, approximately 85% of the broader market’s total cumulative return stemmed from reinvested dividends and the benefits of compounding. Strategies centered around dividend-paying stocks offer the potential for greater stability, consistent income, and a safeguard against economic uncertainty, making them a strong choice for resilient portfolios.

With ongoing tariff uncertainty in the U.S. contributing to market volatility, investors are increasingly turning to dividend-focused strategies to strengthen portfolio stability. After a period dominated by growth stocks, interest in dividend investing has gained momentum. Over the six months leading up to January 31, 2025, US-listed dividend-focused exchange-traded funds (ETFs) recorded average monthly net inflows of nearly $3.3 billion, a sharp rise from the $107 million seen during the same period the previous year, according to a report by Franklin Templeton. Amid an uncertain global economic outlook, investors are seeking more stable assets to create balanced portfolios. Dividend stocks, particularly those with strong fundamentals, tend to provide steady and predictable cash flows. Since these cash flows play a key role in equity valuation models, determining the intrinsic or fair value of dividend-paying stocks is generally more straightforward compared to assessing the value of growth stocks.

READ ALSO: 14 Best Performing Dividend Stocks To Buy Now

Dividend stocks are attractive due to their ability to reduce volatility during market downturns while still providing meaningful growth potential. Historically, dividend-focused strategies have shown resilience across different regions and time periods. The Franklin Templeton report further highlighted that over the three years ending December 31, 2024, dividend-paying stocks experienced lower volatility and smaller maximum drawdowns compared to the broader market across global, US, and European segments. When inflation and interest rate concerns resurfaced last August, dividend stocks proved to be relatively stable in comparison.

Among dividend stocks, investors are more inclined to companies that have raised their payouts consistently. A report by Nuveen indicated that companies initiating or increasing dividends have historically performed well in the three years following an initial Federal Reserve interest rate hike. While the Fed began lowering rates in 2024, the report suggested that rate cuts would proceed at a slower pace in 2025 due to persistent inflationary pressures.

Given the higher interest rate environment, the report emphasized the importance of focusing on dividend-paying companies with strong fundamentals, solid balance sheets, healthy free cash flow, and management teams committed to sustainable dividend growth. In contrast, sectors with high yields but elevated debt levels could face challenges due to their sensitivity to interest rate changes.

Sam Stovall, chief investment strategist at CFRA, also noted that companies with a strong history of increasing dividend payments are typically well-capitalized and financially stable, making them less volatile than the broader market. He suggested that including such companies in an investment portfolio could help reduce fluctuations. Stovall also pointed out that dividend-paying firms generally experience lower volatility compared to those that do not offer dividends. Given this, we will take a look at some of the best dividend growth stocks to invest in.

Our Methodology

For this article, we scanned the list of dividend aristocrats, which are the companies that have raised their payouts for 25 consecutive years or more. From that list, we picked 10 companies with the highest 5-year annual average dividend growth rates. The stocks are ranked in ascending order of their annual average dividend growth in the past five years.

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10. PepsiCo, Inc. (NASDAQ:PEP)

5-Year Average Dividend Growth Rate: 7.25%

PepsiCo, Inc. (NASDAQ:PEP) is frequently seen as a beverage company, which isn’t inaccurate since it offers a wide variety of drinks under its well-known brand. However, the company has a much broader reach, as it also produces and markets snacks and packaged food products. In fact, its snack segment may be even more compelling than its beverage division, considering that while PepsiCo holds the second-largest position in the non-alcoholic beverage market, it leads the salty snack category through its Frito-Lay business.

PepsiCo, Inc. (NASDAQ:PEP) delivered stable earnings in fiscal year 2024, posting $91.8 billion in revenue, a slight increase from $91.4 billion in the prior year. Operating profit climbed to $12.8 billion from $11.9 billion in FY23, while net income also rose to $9.6 billion. Looking ahead to 2025, the company expects organic revenue to grow at a low-single-digit rate, with mid-single-digit growth in core constant currency EPS.

PepsiCo, Inc. (NASDAQ:PEP) has a solid cash position. In FY24, the company generated $12.5 billion in operating cash flow. For FY25, it plans to return approximately $7.6 billion to shareholders through dividends. On February 3, the company announced a 5% increase in its annual dividend to $5.69 per share, marking its 53rd consecutive year of dividend growth, which makes it one of the best dividend aristocrat stocks on our list. The stock supports a dividend yield of 3.5%, as of March 9.

9. AbbVie Inc. (NYSE:ABBV)

5-Year Average Dividend Growth Rate: 7.46%

AbbVie Inc. (NYSE:ABBV) is an Illinois-based multinational pharmaceutical company that mainly focuses on developing and commercializing innovative treatments across various healthcare fields. The company is a major pharmaceutical company with a diverse portfolio spanning immunology, oncology, neurology, and eye care. It also holds a strong position in the aesthetics market, offering well-known cosmetic products such as Juvederm and Botox for skincare and anti-aging treatments. Since the beginning of 2025, the stock has gained more than 19%.

In the fourth quarter of 2024, AbbVie Inc. (NYSE:ABBV) reported $15.1 billion in revenue, marking a 5.6% increase from the previous year and surpassing analysts’ expectations of $14.87 billion. On a GAAP basis, the company posted a net loss of $0.02 per share, while adjusted diluted EPS came in at $2.16, slightly above the projected $2.13. For the full year, combined sales of Skyrizi and Rinvoq totaled $17.7 billion, reflecting a 51% surge fueled by rising global demand and market expansion. Excluding Humira, the company’s overall revenue grew 18% year-over-year, driven by strong performance in its neuroscience and oncology segments.

AbbVie Inc. (NYSE:ABBV) is a solid dividend payer, having raised its payouts for 52 consecutive years. The company’s quarterly dividend comes in at $1.64 per share and has a dividend yield of 3.06%, as of March 9. ABBV is among the best dividend aristocrat stocks to buy.

The number of hedge funds tracked by Insider Monkey owning stakes in AbbVie Inc. (NYSE:ABBV) grew to 84 in Q4 2024, from 68 in the previous quarter. These stakes are worth nearly $2.5 billion in total.

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

5-Year Average Dividend Growth Rate: 7.49%

A. O. Smith Corporation (NYSE:AOS) is an American manufacturing company, headquartered in Wisconsin. The company specializes in residential and commercial water heaters for its consumers. It reported mixed Q4 2024 earnings, with revenues amounting to $912.4 million, down 8% from the same period last year. Following three consecutive years of record sales, the company experienced a decline in revenue in 2024, largely attributed to a sluggish economy in China that continued to weigh on consumer demand. Additionally, water heater sales in North America softened in the second half of the year. However, boiler sales in the region saw an 8% increase, driven by strong demand for high-efficiency commercial products.

Despite reporting weak results, A. O. Smith Corporation (NYSE:AOS)’s cash position remained stable in 2024. The company generated $581.8 million in operating cash flow and its free cash flow for the year came in at $473.8 million. It also returned $496 million to shareholders through dividends and share repurchases. At the end of December 31, 2024, the company had approximately $240 million available in cash and cash equivalents.

On January 17, A. O. Smith Corporation (NYSE:AOS) declared a quarterly dividend of $0.34 per share, which was in line with its previous dividend. Overall, the company has raised its dividends for 32 years in a row. Moreover, it has been making uninterrupted dividends to shareholders for 85 years. With a dividend yield of 3.06%, as of March 9, AOS is one of the best dividend aristocrat stocks on our list.

7. Roper Technologies, Inc. (NASDAQ:ROP)

5-Year Average Dividend Growth Rate: 10.11%

Roper Technologies, Inc. (NASDAQ:ROP) is a Florida-based manufacturing company that specializes in industrial equipment. The company’s success is largely driven by its strategic approach to mergers and acquisitions (M&A). By focusing on smaller businesses with strong market positions and low capital requirements, the company ensures its acquisitions remain competitive while maintaining high customer retention. Rather than pursuing high-risk, high-growth opportunities, Roper prioritizes businesses with stable cash flow. This disciplined M&A strategy has resulted in exceptional capital efficiency, as reflected in its Cash Return on Investment (CRI), which has surpassed 500% in recent years. This efficiency underscores Roper’s ability to generate significant cash flow with minimal capital investment. Since the start of 2025, the stock has surged by over 14.5%.

Roper Technologies, Inc. (NASDAQ:ROP) reported strong earnings in the fourth quarter of 2025. The company’s revenue came in at $1.88 billion, which showed a 16.3% growth from the same period last year. Adjusted net earnings rose by 10% to $520 million. In line with this, the company allocated $3.6 billion in capital toward acquiring high-quality vertical software businesses. Notable acquisitions included Procare Solutions, a leading provider of early childhood education software, and Transact Campus, which was successfully integrated with the CBORD education and healthcare software division.

Roper Technologies, Inc. (NASDAQ:ROP) currently offers a quarterly dividend of $0.825 per share and has a dividend yield of 0.56%, as of March 9. It is one of the best dividend aristocrat stocks on our list as the company has raised its payouts for 33 years in a row. This dividend growth is attributed to the company’s strong cash position. In FY24, its operating cash flow came in at $2.4 billion and free cash flow amounted to nearly $2.3 billion. The operating cash flow and free cash flow showed YoY growth of 17% and 16%, respectively.

6. T. Rowe Price Group, Inc. (NASDAQ:TROW)

5-Year Average Dividend Growth Rate: 10.29%

T. Rowe Price Group, Inc. (NASDAQ:TROW) ranks sixth on our list of the best dividend aristocrat stocks. The American asset management company reported preliminary month-end assets under management of $1.65 trillion as of January 31, 2025, reflecting an increase from $1.60 trillion in the previous month. It also noted preliminary net outflows of $2.1 billion for January 2025.

In the fourth quarter of 2024, T. Rowe Price Group, Inc. (NASDAQ:TROW) reported $1.8 billion in revenue, reflecting an 11.1% increase from the same period the previous year. Operating expenses exceeded $1.25 billion, rising slightly by 0.1% year-over-year. The company is actively expanding its ETF business and targeting high-growth areas such as alternative investments. With no long-term debt on its balance sheet, it maintains significant financial flexibility to adapt and implement strategic initiatives.

On February 11, T. Rowe Price Group, Inc. (NASDAQ:TROW) announced a 2.4% increase in its quarterly dividend, raising it to $1.27 per share. This adjustment extended its dividend growth streak to 39 consecutive years. In the latest quarter, the company distributed $355 million to shareholders through dividends. As of March 9, the stock has a dividend yield of 5.05%.

5. NextEra Energy, Inc. (NYSE:NEE)

5-Year Average Dividend Growth Rate: 10.40%

NextEra Energy, Inc. (NYSE:NEE) is a Florida-based renewable energy company that generates, transmits, and sells electricity. The stock is generating strong returns, surging by nearly 26% in the past 12 months. The company primarily operates as a regulated utility, ensuring a stable and predictable revenue stream. Its utility business in Florida holds a monopoly within its service areas, though any proposed capital investments or rate adjustments require regulatory approval.

In addition to its utility operations, NextEra Energy, Inc. (NYSE:NEE) generates consistent cash flow through its clean energy segment, which operates under long-term contracts. With the rising demand for renewable energy, the company is aggressively expanding this division. Management aims to increase its renewable energy capacity from the current 36 gigawatts to 46.5 gigawatts by 2027, potentially doubling the business over the next few years.

On February 14, NextEra Energy, Inc. (NYSE:NEE) announced a 14% increase in its quarterly dividend, raising it to $0.5665 per share. This adjustment extended its dividend growth streak to 29 consecutive years, which makes it one of the best dividend aristocrat stocks. Strong cash flow supports these distributions, with NextEra generating more than $13.2 billion in operating cash flow during fiscal 2024. Looking ahead, the company plans to grow its dividend per share by approximately 10% annually through at least 2026, using its 2024 payout as the benchmark. The stock supports a dividend yield of 3.11%, as of March 9.

4. Target Corporation (NYSE:TGT)

5-Year Average Dividend Growth Rate: 11.23%

Target Corporation (NYSE:TGT) is an American retail corporation, headquartered in Minnesota. The company operates a chain of hypermarkets and discount department stores. It is recognized for its wide selection of products, including apparel, electronics, and home goods. A significant portion of its revenue comes from its owned and exclusive brands, a strategy that not only provides consumers with unique offerings but also helps drive higher profit margins. With a strong omnichannel model, the company ensures a seamless shopping experience across both physical stores and online platforms. The majority of its sales—over 96%—are fulfilled through its brick-and-mortar locations. By leveraging its extensive store network as fulfillment hubs, the company strengthens its competitive position against online-only retailers.

In the fourth quarter of 2024, Target Corporation (NYSE:TGT) reported revenue of $30.9 billion, which fell by 3.1% from the same period last year. However, the revenue beat analysts’ estimates by $83.7 million. Its comparable sales increased by 1.5%, driven by strong customer traffic and digital growth. Sales trends in Apparel and Hardlines improved significantly, accelerating by nearly four percentage points compared to the previous quarter. Digital sales also saw solid growth, rising 8.7% during the period. Additionally, Same-Day delivery, supported by Target Circle 360™, experienced a more than 25% increase year-over-year.

In FY24, Target Corporation (NYSE:TGT) generated over $7.3 billion in operating cash flow. Its strong cash position enabled the company to pay dividends worth $513 million in Q4 2024, compared with $508 million in the prior-year period. Currently, it offers a quarterly dividend of $1.12 per share and has a dividend yield of 3.89%, as of March 9. TGT is one of the best dividend aristocrat stocks as the company has been growing its payouts for 53 consecutive years.

3. Automatic Data Processing, Inc. (NASDAQ:ADP)

5-Year Average Dividend Growth Rate: 11.84%

Automatic Data Processing, Inc. (NASDAQ:ADP) is an American management services company that offers payroll processing, tax administration, and human capital management services to its consumers. The company provides these services by utilizing cloud-based software to streamline workforce operations and allow businesses to focus on growth. In the second quarter of fiscal 2025, revenue increased by 8% year-over-year, reaching $5.05 billion. Looking ahead, the company expects full-year revenue growth of 6% to 7% and anticipates expanding its adjusted EBIT margin by 30 to 50 basis points.

With operations in 140 countries, Automatic Data Processing, Inc. (NASDAQ:ADP) manages payroll for approximately one in six U.S. workers, supporting a global workforce of 16 million employees. Its extensive client base has solidified ADP’s position as an industry leader, providing not only efficient payroll solutions but also valuable economic insights derived from workforce data. These insights, including wage benchmarks, help businesses stay competitive, adding further value to the company’s services. In the past 12 months, the stock has surged by nearly 26%.

Automatic Data Processing, Inc. (NASDAQ:ADP) maintains a strong financial position with substantial cash reserves, closing the quarter with over $2.2 billion in cash and cash equivalents. During the first half of the fiscal year, operating cash flow reached nearly $2 billion, an increase from $1.35 billion in the same period the previous year. With a track record of 50 consecutive years of dividend growth, ADP is one of the best dividend aristocrat stocks on our list. The company pays a quarterly dividend of $1.54 per share and has a dividend yield of 2.01%, as of March 9.

2. Nordson Corporation (NASDAQ:NDSN)

5-Year Average Dividend Growth Rate: 14.87%

Nordson Corporation (NASDAQ:NDSN) is an Ohio-based multinational company that designs and produces dispensing equipment used for applying adhesives, sealants, coatings, and other materials. The company reported mixed earnings in fiscal Q1 2025. Its revenue for the quarter came in at $615.4 million, which fell by 2.8% from the same period last year. The company’s sales reflected an 8% boost from acquisitions, which was offset by a 9% decline in organic sales and a 2% negative impact from currency translation. Net income for the quarter came in at $95 million, translating to earnings of $1.65 per diluted share. This marked a decrease from the previous year’s first-quarter net income of $110 million, or $1.90 per diluted share.

Although Nordson Corporation (NASDAQ:NDSN) reported lower earnings, it experienced a broad increase in order entry during the quarter, with backlog expanding by approximately $85 million. Given current trends and order visibility, the company anticipates second-quarter fiscal 2025 sales to range between $650 million and $690 million. Adjusted earnings per diluted share for the quarter are expected to fall between $2.30 and $2.50.

Nordson Corporation (NASDAQ:NDSN) ended the quarter with $130.4 million in cash and cash equivalents, up from $116 million in the same period last year. In addition, the company generated $160 million in operating cash flow during the quarter and its free cash flow came in at $137.7 million. Due to this strong cash generation, the company was able to increase its payouts for 61 years in a row. It currently offers a per share dividend of $0.78 every quarter and has a dividend yield of 1.45%, as of March 9.

1. Lowe’s Companies, Inc. (NYSE:LOW)

5-Year Average Dividend Growth Rate: 16.39%

Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement company, based in North Carolina. The company benefits from three major factors driving its business: rising home prices, personal income growth outpacing inflation, and the record-high average age of homes in the US. These trends are expected to sustain demand for its products as homeowners continue to focus on home improvements and repairs.

In the fourth quarter of 2024, Lowe’s Companies, Inc. (NYSE:LOW) reported revenue of $18.55 billion, reflecting a slight decline of 0.2% from the previous year. Comparable sales inched up by 0.2%, supported by strong Pro and online sales, a robust holiday season, and post-hurricane rebuilding efforts. However, growth was partially offset by short-term pressures on discretionary spending in the DIY segment.

Lowe’s Companies, Inc. (NYSE:LOW), one of the best dividend aristocrat stocks, offers a quarterly dividend of $1.15 per share and has a dividend yield of 1.90%, as of March 9. The company maintained a solid cash position in the latest quarter, ending Q4 with nearly $1.8 billion in cash and cash equivalents, up from $921 million a year earlier. For fiscal 2024, operating cash flow reached $9.7 billion, an increase from $8.1 billion in the prior year. The company also returned $6.5 billion to shareholders through dividends and share repurchases. It has been rewarding shareholders with growing dividends consistently for the past 59 years.

Overall, Lowe’s Companies, Inc. (NYSE:LOW) ranks first on our list of the best dividend aristocrat stocks. While we acknowledge the potential for LOW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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