We recently compiled a list of the 13 Best Dividend Growth Stocks With 10%+ Yearly Increases. In this article, we are going to take a look at where Automatic Data Processing, Inc. (NASDAQ:ADP) stands against the other dividend growth stocks.

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.

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).

Automatic Data Processing, Inc. (NASDAQ:ADP)

5-Year Average Annual 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. With operations spanning 140 countries, the company manages payroll for approximately one in six US workers, serving a total of 16 million employees globally. Its extensive client base has solidified ADP’s position as a leader in the industry, delivering both operational efficiency and key economic insights derived from its workforce data. These insights, including wage benchmarks, provide businesses with a competitive advantage, further strengthening the company’s service portfolio.

Since the start of 2025, Automatic Data Processing, Inc. (NASDAQ:ADP) has surged by over 5%. The company utilizes its cloud-based software and solutions to streamline workforce logistics, allowing businesses to focus on growth. In the second quarter of fiscal 2025, it reported an 8% year-over-year increase in revenue, reaching $5.05 billion. Looking ahead, the company expects revenue growth of 6% to 7% for the full fiscal year, along with an adjusted EBIT margin expansion of 30 to 50 basis points.

Automatic Data Processing, Inc. (NASDAQ:ADP) maintained a strong cash position, closing the quarter with more than $2.2 billion in cash and cash equivalents. Over the first half of the fiscal year, the company generated close to $2 billion in operating cash flow, marking an increase from $1.35 billion during the same period last year. With a 50-year streak of dividend growth under its belt, ADP is one of the best dividend stocks to invest in. The company offers a quarterly dividend of $1.54 per share and has a dividend yield of 2.01%, as of February 8.

Overall ADP ranks 9th on our list of the best dividend stocks with dividend growth rates. While we acknowledge the potential for ADP 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 ADP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.