In this dividend contenders list, we will take a look at dividend growth companies.
Dividend stocks have long been favored by investors for the income they generate, and they become even more appealing when dividends increase over time. Investors frequently seek out companies with a strong history of raising their dividends, as this growth boosts their income over the long term. Sustaining long-term dividend growth is challenging. For instance, “dividend aristocrats” are companies that have grown their dividends consistently for at least 25 years, and only about 68 US companies have been successful in achieving this. This demonstrates how difficult it is to attain such a high standard. However, many companies still manage to build shorter dividend growth histories, showcasing their resilience and potential to reach even greater milestones over time. Dividend contenders are well-regarded for having raised their dividends for 10 straight years, though they have yet to reach the 25-year mark needed to be considered long-term dividend growers.
Investors are drawn to dividend growth stocks, as these stocks have shown strong performance over the years. Data from Ned Davis Research covering the past 50 years revealed that high-quality companies that initiate and increase dividends have delivered higher returns and lower volatility than an equal-weighted index. By holding a portfolio of dividend growth stocks, investors can potentially achieve not only favorable risk-adjusted returns but also a more stable investment experience—one less impacted by the risks of market timing, which can reduce long-term gains. This strategy can help investors build wealth steadily over time, contributing to a more secure financial future.
Recently, tech stocks have surged to the forefront, and investors are capitalizing on this momentum, temporarily overshadowing dividend stocks. However, this shift doesn’t imply a dim outlook for dividend stocks. Over the long term, dividend growth stocks have consistently demonstrated their strength and reliability. According to a report by Nuveen, companies that consistently grow or start paying dividends have delivered higher annualized returns with less volatility compared to other parts of the equity market. Although these dividend growth stocks don’t outperform in every market condition, their solid risk-adjusted returns over extended periods make them a strong foundation for an equity portfolio.
Also read: Dividend Champions List: Top 15
Michael Clarfeld, manager of the Dividend Strategy portfolios at ClearBridge Investments, supports investing in dividend stocks. Clarfeld emphasizes the value of long-term compounding, viewing dividend stocks as essential for a well-rounded portfolio. He advocates for a dividend growth approach, focusing on companies capable of steadily increasing their dividends over time. Instead of chasing high yields for immediate gains, he advises investors to consider total return, which includes the reinvestment of dividends. In an interview with Morningstar, he noted that the average company in his portfolios has compounded dividends at around 9% annually, meaning an investor’s income could potentially double every eight years. Clarfeld further said that dividend investing centers on evaluating a company’s cash flows and how they allocate payouts to investors.
In this dividend contenders list, we will take a look at companies that have raised their payouts for at least 10 consecutive years.
Image by Alexsander-777 from Pixabay
Our Methodology:
This list focuses on dividend contenders—companies known for raising their dividends consistently for 10 years but less than 25. From this group, we selected those with the highest dividend yields as of November 11, ranked from lowest to highest yield.
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).
15. The PNC Financial Services Group, Inc. (NYSE:PNC)
Dividend Yield as of November 11: 3.04%
The PNC Financial Services Group, Inc. (NYSE:PNC) is an American bank holding and financial services company that offers a wide range of services to its consumers. The company reported strong earnings in the third quarter of 2024, achieving positive operating leverage through revenue growth and disciplined expense management, while also expanding its customer base and bolstering capital levels. Notably, net interest income and net interest margin improved, signaling the start of a growth path toward anticipated record NII in 2025. In June, the Federal Reserve released its annual stress test results, showing PNC with a start-to-trough CET1 ratio depletion of just 1.6%, the best performance among its peers.
The PNC Financial Services Group, Inc. (NYSE:PNC) reported revenue of $5.43 billion in Q3 2024, up nearly 4% from the same period last year. The company’s net interest income for the quarter came in at $3.4 billion, growing from $3.3 billion in the previous quarter. It is actively utilizing AI to enhance its operations. Recently, the company has entered into an agreement with Plaid to form direct data access, allowing PNC customers across the country to securely connect and share their financial data with selected financial apps via Plaid. PNC utilizes Akoya as its API provider to transmit customer financial information to data recipients.
In October, The PNC Financial Services Group, Inc. (NYSE:PNC) declared a quarterly dividend of $1.60 per share, having raised it by 3.2% in July. This marked the company’s 14th consecutive year of dividend growth, which makes PNC one of the best stocks on our dividend contenders list. The stock has a dividend yield of 3.08%, as of November 11.
At the end of Q2 2024, 51 hedge funds tracked by Insider Monkey reported having stakes in The PNC Financial Services Group, Inc. (NYSE:PNC), compared with 52 in the previous quarter. These stakes have a total value of $911 million. With 2.2 million shares, Citadel Investment Group was the company’s leading stakeholder in Q2.
14. Fulton Financial Corporation (NASDAQ:FULT)
Dividend Yield as of September 28: 3.20%
Fulton Financial Corporation (NASDAQ:FULT) is an American regional financial services company that offers services in banking, lending, and investment management. The company’s earnings for the third quarter of 2024 remained strong. It generated $317.6 million in revenues, which showed a significant 14.6% growth from the same period last year. The company’s strong performance, consistent business trends, and stable asset quality were further boosted by a significant contribution from the Republic acquisition. Since the start of 2024, the stock has surged by nearly 28.8% and its 12-month returns came in at 57.7%.
Fulton Financial Corporation (NASDAQ:FULT), one of the best stocks on our dividend contenders list, has a strong cash position which has helped it grow its dividends over the years. The company’s operating cash flow for the trailing twelve-month period came in at $231.2 million. In addition, it has nearly $1.6 billion available in cash in the most recent quarter.
On September 17, Fulton Financial Corporation (NASDAQ:FULT) announced a quarterly dividend of $0.17 per share, which was in line with its previous dividend. Overall, the company maintains a 17-year streak of consistent dividend growth. The stock’s dividend yield on November 11 came in at 3.2%.
Insider Monkey’s database of Q2 2024 indicated that 13 hedge funds owned stakes in Fulton Financial Corporation (NASDAQ:FULT), which remained unchanged from the previous quarter. The stakes owned by these hedge funds have a collective value of $190 million in total. Ken Griffin’s Citadel Investment Group was the company’s leading stakeholder in Q2.
13. Northrim BanCorp, Inc. (NYSE:NRIM)
Dividend Yield as of September 28: 3.24%
Northrim BanCorp, Inc. (NYSE:NRIM) is an Alaska-based bank holding company that offers various financial products and services including checking and savings accounts, loans, mortgages, credit cards, investment services, treasury management, and online banking facilities. The company’s strategic emphasis on gaining market share, while upholding a disciplined credit culture, resulted in another strong quarter. Ongoing investments in infrastructure and personnel are attracting new clients who value the distinctive service offered. Looking ahead, the company remains optimistic about further growth in deposits and loans across its expanding presence in Alaska.
Northrim BanCorp, Inc. (NYSE:NRIM) experienced solid deposit-funded loan growth in the third quarter. Both deposits and loans grew by 7% compared to the end of the second quarter. Additionally, its deposit market share rose by 4% over the past year and by 42% over the past five years. Its cash position is solid which makes it a strong dividend payer. The company’s trailing twelve-month operating cash flow came in at $5.79 million.
Northrim BanCorp, Inc. (NYSE:NRIM) currently offers a quarterly dividend of $0.62 per share, having raised it by $1.6% in August this year. Through this increase, the company stretched its dividend growth streak to 14 years, which makes NRIM one of the best dividend stocks on our dividend contenders list. The stock has a dividend yield of 3.24%, as of November 11.
As of Q2 2024, 7 hedge funds in Insider Monkey’s database owned stakes in Northrim BanCorp, Inc. (NYSE:NRIM), which remained unchanged from the previous quarter. These stakes are worth $8.5 million in total.
