Lowe’s Companies, Inc. (LOW), Medtronic, Inc. (MDT): Three Under-the-Radar Stocks Every Dividend Investor Should Own

As a result of Obamacare, a medical device excise tax is skimming 2.3% off the top of a company’s revenues to pay for the Medicaid expansion. But while competitor Stryker Corporation (NYSE:SYK) is slashing jobs to offset the loss of revenues, Medtronic, Inc. (NYSE:MDT) will actually augment headcount.

3. Target Corporation (NYSE:TGT)

Source: Target.

Target Corporation (NYSE:TGT) is crowned not only a Dividend Aristocrat, but also the queen of budget-friendly yet trendy goods. The discount retailer has hiked its dividend for 45 consecutive years. The stock currently boasts a dividend yield of 2.1%.

Target Corporation (NYSE:TGT)’s 29% payout ratio is the most modest of these three companies. Yet the company has increased its dividend more than Lowe’s and Medtronic, Inc. (NYSE:MDT) over the past five years. In fact, Target Corporation (NYSE:TGT) raised its dividend 125%, while Lowe’s and Medtronic, Inc. (NYSE:MDT) increased their dividends roughly 88% and 39%, respectively, during that same five-year period.

Target Corporation (NYSE:TGT) boasts opportunities to expand internationally, and it recently branched out into the Canadian market. Although the capital investments required will initially depress Target Corporation (NYSE:TGT)’s cash flow, the retailer will likely enjoy improved cash flows as the Canadian stores become more established.

Final Foolish thoughts
Be sure to look past lavish dividend yields. Make sure a company has the wherewithal to back its current dividend and, more important, boost it. By overlooking companies that pay lower yields, you may be missing out on the best dividend growth stocks of the coming decade.

The article 3 Under-the-Radar Stocks Every Dividend Investor Should Own originally appeared on Fool.com is written by Nicole Seghetti.

Fool contributor Nicole Seghetti owns shares of Target and Stryker. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Lowe’s. The Motley Fool owns shares of Medtronic.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.