In this article, we will take a look at some of the best dividend stocks with dividend growth rates.
Dividend stocks faced a tough year in 2024 as investor focus largely moved toward technology stocks. The Dividend Aristocrat Index, which tracks companies with a minimum of 25 consecutive years of dividend growth, gained just over 6% in 2024, falling well behind the broader market’s nearly 25% return. This lagging performance isn’t uncommon for dividend stocks, which often struggle to attract interest when more high-growth opportunities dominate the market. However, experienced investors may see the long-term value and stability that dividend stocks continue to offer.
Dividends have historically been a key component of total returns for US stocks, contributing nearly one-third of overall equity gains since 1926. Between 1980 and 2019, a period characterized by declining interest rates, dividends accounted for 75% of the broader market’s returns. In a low-rate environment, dividends become even more valuable by ensuring a steady income stream when fixed-income investments provide lower yields. Companies that introduce dividends rarely discontinue them and often increase payouts over time. In addition, offering a dividend can make a stock more attractive to investors, potentially driving up its market value.
Also read: 10 Best Energy Dividend Stocks To Buy Right Now
A report by Franklin Templeton highlighted that over the past decade, dividends for the broader market index have consistently grown at an average annual rate of just over 7%. In strong market conditions, dividends have helped enhance total returns, while in difficult years—such as 2020 and 2022, when market returns were weak or negative—they played a crucial role in stabilizing returns and strengthening portfolio resilience.
Dividend-paying stocks offer more than just regular payouts—they often provide a defensive edge, making them valuable during periods when preserving wealth and maintaining steady income are priorities. A report by Eagle Asset Management examined instances where the broader market declined by at least 15% before recovering to its previous high. The study used three dividend-focused benchmarks to emphasize the importance of not only investing in dividend-yielding companies but also prioritizing those with a track record of consistently increasing payouts. The findings revealed that indexes composed of dividend-paying companies tend to outperform the broader market, particularly during prolonged downturns. This highlights the resilience and potential outperformance of dividend-focused investments during turbulent market conditions.
Dividends play a significant role in global equity markets, contributing approximately 34% of the MSCI World Index’s annual returns since February 1, 1970. Historically, holding shares in companies committed to dividend growth has provided several advantages, including strong absolute returns and superior risk-adjusted performance across full market cycles. These investments have also demonstrated lower volatility compared to the broader MSCI World Index, offering a level of capital preservation even in challenging market environments. In addition, they provide a diversified income stream with the potential for both steady income growth and capital appreciation.
Within the dividend space, companies that regularly raise their payouts are more favored among investors. Given this, we will take a look at some of the best dividend growth stocks with over 10% dividend growth rate.
Photo by Dan Dennis on Unsplash
Our Methodology:
For this list, we used a Finviz stock screener and picked dividend companies with positive dividend growth rates in the past five years. From that group, we picked 13 stocks that have raised their dividends at an annual average rate of over 10% in the past five years and ranked them according to their dividend growth rates. We also considered hedge fund sentiment around each stock in Insider Monkey’s database, as of the third quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
13. Texas Instruments Incorporated (NASDAQ:TXN)
5-Year Average Annual Dividend Growth Rate: 10.7%
Texas Instruments Incorporated (NASDAQ:TXN) is an American multinational semiconductor company that specializes in analog and embedded chips. As a cyclical business, the company continues to face challenges, with industrial sectors like automation and energy still in the process of recovery. The company has been scaling back factory utilization to manage inventory amid a prolonged downturn. While near-term headwinds persist, TXN’s focus on expanding its manufacturing capacity remains a significant long-term advantage. With nearly 70% of its six-year capital expenditure cycle completed, the company is establishing a scalable and cost-efficient 300-millimeter production network. This strategic positioning ensures it can effectively meet future demand. Despite ongoing market volatility, these investments reinforce TXN’s competitive edge, making it a strong long-term prospect even in an uncertain economic environment.
Texas Instruments Incorporated (NASDAQ:TXN) demonstrated a strong cash position in FY24. Its trailing twelve-month operating cash flow came in at $6.3 billion and free cash flow for the period amounted to $1.5 billion. Moreover, the company returned $4.8 billion to shareholders through dividends in the fourth quarter of 2024. It currently pays a quarterly dividend of $1.36 per share and has a dividend yield of 3.02%, as of February 8. It is one of the best dividend stocks on our list as the company has been growing its payouts for 21 consecutive years.
The hedge fund sentiment around Texas Instruments Incorporated (NASDAQ:TXN) remained positive as hedge fund positions in the company grew to 57 in Q3 2024, from 50 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds are worth nearly $3 billion in total. With over 4.2 million shares, First Eagle Investment Management was the company’s leading stakeholder in Q3.
12. Oracle Corporation (NYSE:ORCL)
5-Year Average Annual Dividend Growth Rate: 10.76%
Oracle Corporation (NYSE:ORCL) is a Texas-based software company. It delivered strong financial results in fiscal Q2 2025, reporting $14.06 billion in revenue, a 9% increase from the previous year. Cloud services, encompassing both Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS), generated $5.9 billion, reflecting a 24% rise in both USD and constant currency. Notably, cloud infrastructure revenue (IaaS) surged 52% to $2.4 billion. With this momentum, Oracle’s cloud revenue is on track to exceed $25 billion for the fiscal year.
Parnassus Investments made the following comment about ORCL in its Q3 2024 investor letter:
“Oracle Corporation (NYSE:ORCL) announced second-quarter results that exceeded consensus expectations, driven by growth in its cloud infrastructure business, which is benefiting from demand for AI applications. Investor sentiment was further bolstered by the company’s announcement of a new partnership with Amazon.”
In the past 12 months, Oracle Corporation (NYSE:ORCL) has outperformed the market, surging by nearly 50%. The company is widely recognized for its advanced data center infrastructure, which plays a critical role in AI development. Demand for its services currently outpaces supply, as the company remains a key partner for top AI firms, including OpenAI, Cohere, and Elon Musk’s xAI. Despite its efficient operations, Oracle is still working to keep up with growing demand, with 162 data centers either active or under construction as of fiscal Q1 2025. To bridge this gap, the company has ambitious expansion plans, aiming to scale its data center network to between 1,000 and 2,000 in the future.
Oracle Corporation (NYSE:ORCL) is also gaining traction among investors because of its strong dividend history. The company has paid regular dividends to shareholders since 2009 and has raised its payouts at an annual average rate of nearly 11% in the past five years. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 0.92%, as of February 8.
At the end of Q3 2024, 91 hedge funds tracked by Insider Monkey held stakes in Oracle Corporation (NYSE:ORCL), compared with 93 in the previous quarter. The collective value of these stakes is over $7 billion.
11. NIKE, Inc. (NYSE:NKE)
5-Year Average Annual Dividend Growth Rate: 10.78%
NIKE, Inc. (NYSE:NKE) is an Oregon-based apparel and footwear company. It faced a challenging second quarter, with revenue in the Chinese market dropping 8% year over year. However, the decline was less severe than analysts had predicted, as they had expected a 10% drop. Gross margins also saw a slight dip, falling to 43.6% from 44.6% in the same quarter the previous year. Despite these setbacks, there were some positive takeaways, including a 5% reduction in operating expenses, which could give the company additional flexibility to increase its marketing budget.
In addition, NIKE, Inc. (NYSE:NKE) prioritizes shareholders’ returns as the company’s cash position is strong. In the most recent quarter, the company had $7.9 billion available in cash and cash equivalents, up 1% from the same period last year. It also distributed $1.6 billion to shareholders through dividends and share buybacks. The company has been rewarding shareholders with growing dividends for 23 consecutive years, which makes NKE one of the best dividend stocks on our list. It currently offers a quarterly dividend of $0.40 per share and has a dividend yield of 2.33%, as of February 8.
The number of hedge funds tracked by Insider Monkey owning stakes in NIKE, Inc. (NYSE:NKE) at the end of Q3 2024 jumped to 75, from 66 in the previous quarter. These stakes have a collective value of over $5 billion. With over 16.2 million shares, Pershing Square was the company’s leading stakeholder in Q3.
