In this article, we will take a look at some of the best dividend growth stocks.
Investors continue to favor large-cap stocks, as these companies often serve as the foundation of popular index funds and are well-known among both seasoned professionals and casual traders. Moreover, large-cap firms have demonstrated their ability to withstand economic uncertainty, thanks to their strong market presence and substantial cash reserves, which help them weather financial downturns with relative ease. For the second consecutive year in 2024, US large-cap stocks outpaced cash, bonds, and international equities, securing the top spot in market performance.
Also read: 12 Best International Dividend Stocks To Buy Now
A Morningstar report revealed that over the 10-year period ending June 30, 2024, large-cap stocks have outperformed small-cap stocks by an average of more than 6 percentage points annually. This disparity stems from differences in sector exposure—small-cap benchmarks have a lower concentration of technology stocks and a greater presence in traditional industries like consumer cyclicals, financials, real estate, and industrials. Although economic growth has been robust, these sectors have struggled to match the pace set by technology-related stocks.
In addition, according to JPMorgan Wealth Management, large-cap stocks play a key role in driving long-term capital appreciation for investors. Over the 10-year period from 2013 to March 2023, large-cap stocks delivered a total return of 162%, outperforming mid-cap and small-cap stocks, which posted returns of 139% and 108%, respectively.
Large-cap stocks demonstrate their resilience through their ability to increase dividends even in times of market distress. Several leading companies have maintained decades-long streaks of dividend growth, weathering major economic crises such as the 2008 recession and the 2020 pandemic. A report by T. Rowe Price highlighted that large-cap firms with a track record of consistent dividend increases have shown relative strength during downturns, suffering smaller losses than the broader market. In addition, these companies have often outperformed during periods of market stagnation and have participated in a substantial share of gains during bull markets.
Dividend growth is a key factor when evaluating dividend stocks, as companies that consistently raise their payouts have historically outperformed those that do not. A report by RMB Capital found that between 1972 and 2018, companies that initiated or grew their dividends achieved an average annual return of 9.62%, significantly surpassing the 2.40% return of non-dividend-paying firms. Even the broader market, with a 7.30% return, lagged behind dividend growers. The report also emphasized that companies with a strong history of dividend increases have not only sustained but expanded their payouts, even during economic downturns. From a portfolio perspective, dividend growth stocks provide solid diversification, as they are spread across multiple industries. This offers an advantage over high-yield portfolios, which tend to be concentrated in mature sectors like utilities and, prior to 2007, financials.
Analysts recommend incorporating dividend stocks into income portfolios, especially as several major tech companies have adopted dividend policies this year. With robust cash flows, these firms are well-positioned to maintain and expand their dividend payouts over time. Given this, we will take a look at some of the best large-cap dividend growth stocks.
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Our Methodology:
For this list, we first used a stock screener to identify large-cap dividend stocks with market capitalization above $10 billion. From that list, we shortlisted stocks that have 5-year average dividend growth rates of above 10%. The stocks are ranked in ascending order of their dividend growth rates.
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14. United Parcel Service, Inc. (NYSE:UPS)
5-Year Average Annual Dividend Growth Rate: 11.17%
United Parcel Service, Inc. (NYSE:UPS) is an American shipping and supply chain management company that offers various related services to its consumers. The stock saw an 8.6% decline over the past month as investors grew wary of falling package volumes. The drop followed the company’s decision to scale back its business with Amazon Business, which accounts for 11.8% of UPS’s total revenue of $91.1 billion. However, the company reported strong earnings in its most recent quarter.
United Parcel Service, Inc. (NYSE:UPS) reported revenue of $25.3 billion in the fourth quarter of 2024, reflecting a 1.54% increase compared to the same period last year. It has reached a preliminary agreement with its largest customer to cut volume by more than 50% by the second half of 2026. In addition, beginning January 1, 2025, it will fully manage its UPS SurePost product in-house. In response to these shifts, the company is restructuring its US network and implementing multi-year “efficiency reimagined” initiatives, aiming to save approximately $1.0 billion through an extensive process redesign.
United Parcel Service, Inc. (NYSE:UPS) remains a favored choice among income investors due to its solid dividend track record and strong financial position. In fiscal year 2024, the company generated $10.1 billion in operating cash flow, with free cash flow reaching $6.3 billion. Moreover, it returned $5.9 billion to shareholders through dividends and share buybacks. On February 6, the company declared a 0.6% hike in its quarterly dividend to $1.64 per share. This marked the company’s 23rd consecutive year of dividend growth, which makes UPS one of the best dividend stocks on our list. The stock has a dividend yield of 5.74%, as of February 12.
13. Target Corporation (NYSE:TGT)
5-Year Average Annual Dividend Growth Rate: 11.23%
Target Corporation (NYSE:TGT) is a Minnesota-based retail corporation that operates a chain of hypermarkets and discount department stores. Over the past year, the company has consistently grown its operating income while maintaining a strong financial position. Despite carrying a relatively high level of debt, the company has enough cash, cash equivalents, and short-term investments to cover its short-term obligations. Its increasing cash reserves, coupled with an interest coverage ratio of 11.6, further support its financial stability. In addition, Target’s solid liquidity is underpinned by a clean balance sheet with no intangible assets and a healthy return on invested capital (ROIC) of 11.5%.
In January, Target Corporation (NYSE:TGT) reiterated its commitment to wellness by announcing plans to introduce over 2,000 new products across multiple categories, including more than 600 exclusive to the company. Furthermore, it is expanding its men’s wellness range with new offerings, such as Dr. Squatch body care, additional products from Dwayne Johnson’s Papatui men’s care line, and a new men’s fragrance from the vegan brand Fin’ery.
Target Corporation (NYSE:TGT) boasts a solid dividend history and a strong financial position. In the first nine months of 2024, the company generated $4.07 billion in operating cash flow and held $3.4 billion in cash and cash equivalents by the end of the quarter. This financial strength enabled the company to return $516 million to shareholders through dividends. The company offers a quarterly dividend of $1.12 per share with a dividend yield of 3.51%, as of February 12. Over the past five years, Target has increased its dividend payouts at an average annual rate of 11.2%, and it has maintained an impressive 53-year streak of consistent dividend growth, which makes TGT one of the best dividend stocks on our list.
12. American Express Company (NYSE:AXP)
5-Year Average Annual Dividend Growth Rate: 11.29%
American Express Company (NYSE:AXP) is an American bank holding company. In the fourth quarter of 2024, the company reported revenue exceeding $17 billion, a 9% increase from the same period last year. The company’s net income for the quarter reached over $2.1 billion, marking a 12% year-over-year growth. American Express set records for annual Card Member spending, net card fee revenues, and new card acquisitions, adding 13 million new cards throughout the year. The company also expanded its global network, adding millions of new merchant locations. By year-end, growth accelerated, with billings increasing by 8% in the fourth quarter, fueled by stronger consumer and commercial spending during the holiday season.
In the past 12 months, American Express Company (NYSE:AXP) has surged by over 44%. Over the long run, the company has proven to be an outstanding investment, delivering a 100-fold return since Warren Buffett first acquired the stock and a 21% compound annual growth rate (CAGR) in total returns over the past five years. It has developed a nearly permanent model for inflation protection, with its strong competitive advantages becoming more evident as it continues to grow.
American Express Company (NYSE:AXP) is one of the best dividend stocks on our list as the company has raised its payouts six times in the past three years. Currently, it offers a quarterly dividend of $0.82 per share and has a dividend yield of 0.91%, as of February 12.
11. Automatic Data Processing, Inc. (NASDAQ:ADP)
5-Year Average Annual Dividend Growth Rate: 11.84%
An American management services company, Automatic Data Processing, Inc. (NASDAQ:ADP) ranks eleventh on our list of the best dividend stocks. The company offers payroll processing, tax administration, and human capital management services to its consumers. It leverages its cloud-based software and solutions to optimize workforce logistics, enabling businesses to concentrate on growth. In the second quarter of fiscal 2025, it saw an 8% year-over-year revenue increase, reaching $5.05 billion. Looking forward, the company projects revenue growth of 6% to 7% for the entire fiscal year, along with an expansion of its adjusted EBIT margin by 30 to 50 basis points. The stock has soared by about 23% in the past 12 months.
Operating in 140 countries, Automatic Data Processing, Inc. (NASDAQ:ADP) handles payroll for roughly one in six US workers, serving a global workforce of 16 million employees. Its broad client base has cemented ADP’s leadership in the industry, offering both operational efficiency and valuable economic insights drawn from its workforce data. These insights, such as wage benchmarks, give businesses a competitive edge, further enhancing the company’s service offerings.
Automatic Data Processing, Inc. (NASDAQ:ADP) currently pays a quarterly dividend of $1.54 per share and has a dividend yield of 2.01%, as of February 12. The company ended the quarter with a solid cash position, holding over $2.2 billion in cash and cash equivalents. In the first half of the fiscal year, the company generated nearly $2 billion in operating cash flow, up from $1.35 billion in the same period last year. With 50 consecutive years of dividend growth, ADP stands out as one of the top dividend stocks to invest in.
10. Costco Wholesale Corporation (NASDAQ:COST)
5-Year Average Annual Dividend Growth Rate: 12.28%
Costco Wholesale Corporation (NASDAQ:COST) is an American retail company, based in Washington. The stock has surged by over 47% in the past 12 months. This strong performance reflects the company’s consistent growth and resilience, especially as other retailers faced rising costs. Analysts are positive about its future prospects, praising its proven ability to outperform competitors by steadily gaining market share and utilizing its retailing-as-a-service model, which provides reliable membership fees. Costco has established a solid competitive edge through its membership-based pricing and bulk discount approach, which has attracted a loyal and growing global customer base, as demonstrated by its recent quarterly results.
In fiscal Q1 2025, Costco Wholesale Corporation (NASDAQ:COST) reported revenue of $62 billion, reflecting a 7.5% increase from the previous year. Net income grew to $1.8 billion, up from $1.6 billion in the prior year. The company finished the quarter with a robust cash position, holding almost $11 billion in cash and cash equivalents, compared to $9.9 billion the previous quarter. Additionally, it generated $3.3 billion in operating cash flow.
In the past five years, Costco Wholesale Corporation (NASDAQ:COST) has raised its payouts at an annual average rate of over 12%. In addition, the company maintains a 20-year streak of consistent dividend growth, which makes COST one of the best dividend stocks on our list. Its quarterly dividend comes in at $1.16 per share for a dividend yield of 0.44%, as of February 12.
9. Accenture plc (NYSE:ACN)
5-Year Average Annual Dividend Growth Rate: 12.60%
Accenture plc (NYSE:ACN) is a multinational tech company that deals in information technology services and management consulting. In the latest quarter, two major highlights were the company’s new bookings of $18.7 billion, including 30 client bookings surpassing $100 million, and $1.2 billion in bookings related to generative artificial intelligence (AI). Investors have been closely watching the company’s expanding AI services, which help businesses in areas like analytics, chatbots, and customer support.
In fiscal Q1 2025, Accenture plc (NYSE:ACN) reported revenue of $17.7 billion, a 9% increase from the same period last year. Consulting revenues reached $9 billion. The company has updated its business outlook for fiscal 2025, increasing its full-year revenue growth forecast to 4% to 7% in local currency, while expecting a negative foreign exchange impact of 0.5%. In addition, it has revised its GAAP EPS forecast to a range of $12.43 to $12.79, reflecting the adjusted revenue growth and foreign exchange expectations.
Accenture plc (NYSE:ACN) reported a strong cash position for the quarter, with operating cash flow reaching $1.02 billion, compared to $499 million in the previous year. The company’s free cash flow for the quarter was $870 million, up from $430 million in the same period last year. Demonstrating its commitment to shareholders, Accenture returned $926 million to investors through dividends. The company offers a quarterly dividend of $1.48 per share and has a dividend yield of 1.52%, as of February 12. ACN is one of the best dividend stocks on our list as the company has paid uninterrupted dividends to shareholders since 2005.
8. Broadcom Inc. (NASDAQ:AVGO)
5-Year Average Annual Dividend Growth Rate: 14.14%
Broadcom Inc. (NASDAQ:AVGO) is a California-based semiconductor company that offers a wide range of semiconductor and infrastructure software products. In the fourth quarter of 2024, the company reported revenue of $14.05 billion, a remarkable 51% increase from the previous year. Semiconductor revenue hit a record $30.1 billion, with AI revenue soaring 220% year-over-year to $12.2 billion. This strong growth was driven by the company’s advanced AI XPUs and Ethernet networking solutions. For the full fiscal year 2024, adjusted EBITDA rose 37% year-over-year, reaching a record $31.9 billion.
Broadcom Inc. (NASDAQ:AVGO) is drawing considerable investor attention due to its essential role in powering products across multiple industries, such as data centers and smartphones. Its technology manages over 99% of internet traffic, underscoring its dominance in networking. In addition, the company’s acquisition of VMware, a cloud virtualization firm, a year ago has bolstered its market position. VMware’s operating margin has increased to 70%, and the company is on track to surpass its goal of generating over $8.5 billion in adjusted EBITDA within three years.
Broadcom Inc. (NASDAQ:AVGO), one of the best dividend stocks, currently offers a quarterly dividend of $0.59 per share and has a dividend yield of 1.00%, as of February 12. The company has increased its payouts for 14 straight years. This impressive dividend growth is driven by the company’s strong cash position. In the most recent quarter, Broadcom generated $5.6 billion in operating cash flow and $5.48 billion in free cash flow, accounting for 39% of its total revenue.
7. UnitedHealth Group Incorporated (NYSE:UNH)
5-Year Average Annual Dividend Growth Rate: 14.59%
UnitedHealth Group Incorporated (NYSE:UNH) ranks seventh on our list of the best dividend stocks. The American health insurance company offers a wide range of related products and services to its consumers. The stock has surged modestly by just 1.9% in the past year. Analysts believe that the company may face a somewhat challenging operating environment next year, its strategic initiatives and pricing strategies are likely to drive growth. In addition, the company has effectively improved its operating cost ratio through strategic portfolio initiatives, which bodes well for future profitability. Its diversified portfolio also gives it a competitive edge in the market.
UnitedHealth Group Incorporated (NYSE:UNH) reported its fiscal year 2024 earnings, surpassing investor expectations with strong performance. It generated $400 billion in revenue, an 8% increase from the previous year, driven by growth across its diverse services. Operating earnings for the year were $32.3 billion, but after accounting for expenses related to a cyberattack and challenges in South America, adjusted operating earnings reached $34.4 billion.
UnitedHealth Group Incorporated (NYSE:UNH) delivered strong cash flow results that met investor expectations. The company generated $24.2 billion in operating cash flow for the year, 1.6 times its net income. Throughout 2024, it returned more than $16 billion to shareholders through dividends and share repurchases. In the fourth quarter, its return on equity reached 23.7%, showcasing robust earnings and effective capital management.
With a solid cash position, UnitedHealth Group Incorporated (NYSE:UNH) has established a strong dividend history. The company began paying annual dividends in 1990 and switched to quarterly payouts in 2010, consistently increasing its dividend ever since. The company offers a quarterly dividend of $2.10 per share and has a dividend yield of 1.59%, as of February 12.
6. Nordson Corporation (NASDAQ:NDSN)
5-Year Average Annual Dividend Growth Rate: 14.87%
Nordson Corporation (NASDAQ:NDSN) is a multinational company that designs and produces dispensing equipment used for applying adhesives, sealants, coatings, and other materials. The company is expanding its business through strategic acquisitions. For instance, its purchase of ARAG in August 2023 allowed the company to enter the growing precision agriculture market. Furthermore, in May 2024, Nordson acquired Atrion Corporation for approximately $800 million, enhancing its medical portfolio and broadening its reach into new markets and therapies. This acquisition complements the company’s existing customer base and is expected to have a positive impact on its future performance. With these growth initiatives, Nordson is well-positioned to boost its earnings, free cash flow, and dividends in the future.
In the fourth quarter of 2024, Nordson Corporation (NASDAQ:NDSN) posted revenue of $744.4 million, reflecting a 3.5% increase compared to the same period last year. The growth was driven by a 6% boost from acquisitions and a 1% positive impact from currency translation, though this was partially offset by a 3% decline in organic sales. Net income for the quarter amounted to $122 million, or $2.12 per diluted share.
Nordson Corporation (NASDAQ:NDSN) currently pays a quarterly dividend of $0.78 per share and has a dividend yield of 1.46%, as of February 12. The company has a strong balance sheet, making it a dependable choice for income investors. In FY24, the company generated more than $556 million in operating cash flow, with free cash flow totaling $492 million. This robust cash flow has contributed to one of the longest dividend growth streaks in the market, with over 61 years of consecutive increases.
5. Eli Lilly and Company (NYSE:LLY)
5-Year Average Annual Dividend Growth Rate: 15.05%
Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company that manufactures and develops a wide range of medicines for serious ailments. The company has experienced significant growth in recent years, driven primarily by the success of its glucagon-like peptide-1 (GLP-1) receptor agonist drug portfolio. In the past 12 months, the stock has surged by over 18%.
In the fourth quarter of 2024, Eli Lilly and Company (NYSE:LLY) experienced a 45% surge in revenue, reaching $13.53 billion, fueled by strong sales from Mounjaro and Zepbound. Earnings per share (EPS) for the quarter more than doubled, rising by 102% to $4.88. The company also made significant advancements in its pipeline, including the US approval of Zepbound for moderate-to-severe obstructive sleep apnea in adults with obesity, and the approval of Omvoh for treating moderately to severely active Crohn’s disease.
Eli Lilly and Company (NYSE:LLY) declared a 15.4% hike in its quarterly dividend in December 2024 to $1.50 per share. This marked the company’s 11th consecutive year of dividend growth, which makes LLY one of the best dividend stocks on our list. As of February 12, the stock has a dividend yield of 0.69%.
4. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Average Annual Dividend Growth Rate: 16.39%
Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement company, based in North Carolina. The company offers a wide range of related products and services including hardware, tools, appliances, building materials, paint, plumbing supplies, and garden equipment. In January, the company announced that it is now accepting project nominations for Lowe’s Hometowns, a five-year initiative with a $100 million commitment to community revitalization. This year, the company plans to allocate $10 million to fund 100 renovation projects and assist with 1,700 more projects chosen by its employees. In addition, Lowe’s has pledged $2 million to support relief and recovery efforts for the Southern California wildfires, further emphasizing its ongoing commitment to aiding communities in times of need.
Lowe’s Companies, Inc. (NYSE:LOW) is supported by three key factors that continue to benefit its business. These include the increase in home prices, personal income growth that surpasses inflation, and the fact that the average age of homes in the US is at its highest ever. These trends are expected to maintain strong demand for the company’s products, as homeowners are likely to keep investing in home improvements and repairs in the long run.
In the past five years, Lowe’s Companies, Inc. (NYSE:LOW) has raised its payouts at an annual average rate of over 16%. Moreover, the company has raised its payouts consistently for 59 years, which makes LOW one of the best dividend stocks on our list. The company offers a quarterly dividend of $1.15 per share and has a dividend yield of 1.84%, as of February 12.
3. Morgan Stanley (NYSE:MS)
5-Year Average Annual Dividend Growth Rate: 21.85%
Morgan Stanley (NYSE:MS) is a global financial services firm based in New York, offering a variety of services, including investment banking, securities, wealth management, and investment management, to corporations, financial institutions, governments, and individuals.
Recently, Morgan Stanley (NYSE:MS) has focused on growing its wealth management division, upgrading its technological infrastructure, and ensuring financial stability to comply with changing regulations. Key factors contributing to its success include improving client services through technology and optimizing asset growth while managing risk within regulatory requirements. In the past 12 months, the stock has surged by nearly 58%.
In the fourth quarter of 2024, Morgan Stanley (NYSE:MS) reported revenue of $16.2 billion, which showed a 25% growth from the same period last year. The company posted net income of $3.7 billion, or $2.22 per diluted share, compared to $1.5 billion, or $0.85 per diluted share, from the prior-year period. Total client assets increased to $7.9 trillion across Wealth and Investment Management, driven by strong market performance and healthy net new assets. The company is focusing on four key pillars—strategy, culture, financial strength, and growth—which support its Integrated Firm approach and aim to create long-term value for shareholders.
In the past five years, Morgan Stanley (NYSE:MS) has raised its payouts at an annual average rate of nearly 22%. The company has remained committed to its shareholder value, returning $150 million to investors through dividends in the most recent quarter. Currently, it offers a quarterly dividend of $0.925 per share for a dividend yield of 2.7%.
2. The Goldman Sachs Group, Inc. (NYSE:GS)
5-Year Average Annual Dividend Growth Rate: 22.61%
The Goldman Sachs Group, Inc. (NYSE:GS) is a multinational investment banking company that offers a wide range of financial services to its consumers. A major part of the company’s operations is its asset and wealth management division, which manages trillions of dollars in assets and plays a crucial role in generating revenue. Investors are particularly interested in expanding this segment, as it provides a stable source of income that supports higher market valuations. In addition, the company is adopting a more capital-efficient strategy by reducing its equity and debt investments. This approach is designed to boost growth potential, enhance stability, and increase the company’s reliance on fee-based income. GS has surged by over 65% in the past 12 months.
In the fourth quarter of 2024, The Goldman Sachs Group, Inc. (NYSE:GS) reported revenue of $13.87 billion, marking a 23% year-over-year growth. For the entire year, assets under supervision grew by 12%, reaching a record high of $3.14 trillion. Additionally, its book value per common share increased by 7.4%, totaling $336.77. The company also finished the year with a strong cash position, holding $182 billion in cash and cash equivalents, up from $155 billion in the previous quarter.
The Goldman Sachs Group, Inc. (NYSE:GS) currently offers a quarterly dividend of $3.00 per share and has a dividend yield of 1.85%, as of February 12. In FY24, the company returned $3.8 billion to shareholders through dividends. Moreover, it has never missed a dividend since 1999, which makes GS one of the best dividend stocks on our list.
1. Tractor Supply Company (NASDAQ:TSCO)
5-Year Average Annual Dividend Growth Rate: 26.47%
Tractor Supply Company (NASDAQ:TSCO) is a Tennessee-based farm supplies company that sells home improvement and related equipment and supplies. The company recently acquired Allivet, a pet pharmacy business, expanding its reach in the pet care industry. With over 200 pet stores under the Petsense brand and pet supplies available at its Tractor Supply locations, this acquisition offers an additional growth opportunity for the company, even though growth may be gradual. In the past year, the stock has surged by over 18%.
In the fourth quarter of 2024, Tractor Supply Company (NASDAQ:TSCO) reported net sales of approximately $3.8 billion, reflecting a 3% year-over-year increase. This growth was driven by new store openings and a rise in comparable store sales. Earnings per share (EPS) for the quarter were $0.44, a slight 3% decrease from the previous year. However, both net sales and EPS fell slightly short of expectations. Gross profit grew by 2.8%, reaching $1.33 billion, up from $1.29 billion in the same quarter last year.
Tractor Supply Company (NASDAQ:TSCO)’s cash position also remained strong. The company ended the quarter with about $252 million available in cash and cash equivalents. In FY24, it generated $1.4 billion in operating cash flow. This cash position enabled the company to pay $472.5 million worth of dividends to shareholders in 2024. It currently offers a quarterly dividend of $1.10 per share and has a dividend yield of 1.58%, as of February 12. TSCO is one of the best dividend stocks on our list as the company has been growing its payouts for 15 consecutive years.
Overall Tractor Supply Company (NASDAQ:TSCO) ranks first on our list of the best dividend growth stocks. While we acknowledge the potential for TSCO 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 TSCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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