In this article, we will be taking a look at the 10 best dividend growth stocks to buy now.
The value versus growth stocks debate is perhaps as old as investing as a practice itself. Growth stocks being companies that are expected to outperform the market over time in light of their future potential, and value stocks being companies thought to be trading below their true worth, but expected to yield attractive returns as time passes, both are considered good investment options with their own benefits and defaults. Thus like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), Target Corporation (NYSE: TGT), and Chevron Corporation (NYSE: CVX), value and growth stocks both pose the possibility of being smart investments to add to any portfolio.
When it comes to which type of stock will be able to perform better, research has yielded conflicting results. A study looking at the performance of value and growth stocks between 2000 and 2013 showed that in different cap classes value stocks outperformed growth stocks on a risk-adjusted basis despite being more volatile. Yet it was also observed that during shorter time periods, between 2007 and 2013, growth stocks brought in higher returns in each cap class. Additionally, S&P Global has also mentioned in a report on dividend growth strategies that dividend growth stocks are generally better quality than other stocks on the market when it comes to earnings quality and leverage.
To add to the above, the report mentioned that dividend growth stocks outperformed the S&P 500 High Dividend Index and the S&P Composite 1500 by an average of about 59 bps and 143 bps per month, respectively, between 1999 and 2021. The monthly outperformance of these stocks stood at 229 bps and 358 bps against the S&P Composite 1500 and S&P 500 High Dividend Index respectively during 15 months that were estimated to be the worst-performing months for the S&P Composite 1500 between 1999 and 2021. Thus as one continues to look at the historical performance of these stocks, it becomes clear that they do bear a possibility of outperformance and yielding attractive returns for investors, making them lucrative investment options.
Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Without further ado, let’s take a look at the 10 best dividend growth stocks to buy now.
Our Methodology
We have selected high-quality dividend growth stocks with yields of over 4% and over 20 years of consistent dividend growth. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield and the number of hedge fund holders holding a stake in it, ranking them from the lowest to the highest yield. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.
Best Dividend Growth Stocks to Buy Now
10. Mercury General Corporation (NYSE: MCY)
Number of Hedge Fund Holders: 14
Dividend Yield: 4.29%
Number of Years of Consistent Dividend Increases: 33
Mercury General Corporation (NYSE: MCY) is a property and casualty insurance company. It offers collision, property damage, bodily injury, comprehensive, personal injury protection, and other insurance products. The company ranks 10th on our list of the best dividend growth stocks to buy now.
In the second quarter of 2021, Mercury General Corporation (NYSE: MCY) had an EPS of $1.13, beating estimates by $0.03. The company’s revenue was $957.34 million, up 16.9% year over year and beating estimates by $134.34 million. Mercury General Corporation (NYSE: MCY) has gained 15.35% year to date and 30.7% in the past year.
By the end of the second quarter of 2021, 14 hedge funds out of the 873 tracked by Insider Monkey held stakes in Mercury General Corporation (NYSE: MCY) worth roughly $175 million. This is compared to 20 hedge funds in the previous quarter with a total stake value of approximately $178 million.
Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), Target Corporation (NYSE: TGT) and Chevron Corporation (NYSE: CVX), Mercury General Corporation (NYSE: MCY) is a good stock to invest in.
9. AbbVie Inc. (NYSE: ABBV)
Number of Hedge Fund Holders: 82
Dividend Yield: 4.36%
Number of Years of Consistent Dividend Increases: 49
AbbVie Inc. (NYSE: ABBV), a biotech and healthcare company, is next on our list of the best dividend growth stocks to buy now. It offers a range of products to treat medical issues like chronic lymphocytic leukemia (CLL), and small lymphocytic lymphoma (SLL), mantle cell lymphoma, among a range of others. The company ranks 9th on our list.
Steve Scala, an analyst at Cowen, raised his price target on shares of AbbVie Inc. (NYSE: ABBV) from $120 to $130. The analyst also reiterated an Outperform rating on the stock.
In the second quarter of 2021, AbbVie Inc. (NYSE: ABBV) had an EPS of $3.11, beating estimates by $0.08. The company’s revenue was $13.96 billion, up 33.9% year over year and beating estimates by $322.64 million. AbbVie Inc. (NYSE: ABBV) has gained 9.82% in the past 6 months and 13.23% year to date.
By the end of the second quarter of 2021, 82 hedge funds out of the 873 tracked by Insider Monkey held stakes in AbbVie Inc. (NYSE: ABBV) worth roughly $5.4 billion. This is compared to 72 hedge funds in the previous quarter with a total stake value of approximately $5.9 billion.
Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), Target Corporation (NYSE: TGT) and Chevron Corporation (NYSE: CVX), AbbVie Inc. (NYSE: ABBV) is a good stock to invest in.
8. People’s United Financial, Inc. (NASDAQ: PBCT)
Number of Hedge Fund Holders: 24
Dividend Yield: 4.57%
Number of Years of Consistent Dividend Increases: 29
People’s United Financial, Inc. (NASDAQ: PBCT), the bank holding company for People’s United Bank, National Association, ranks 8th on our list of the best dividend growth stocks to buy now. The company operates through its Commercial Banking and Retail Banking segments and provides cash management, municipal banking, online banking, investment trading, and telephone banking services, among a range of others.
David Rochester, an analyst at Compass Point, raised his price target on shares of People’s United Financial, Inc. (NASDAQ: PBCT) this May to $19.50. The analyst has also reiterated a Neutral rating on the shares.
In the second quarter of 2021, People’s United Financial, Inc. (NASDAQ: PBCT) had an EPS of $0.41, beating estimates by $0.08. The company’s revenue was $479.90 million but missed estimates by $17.70 million. People’s United Financial, Inc. (NASDAQ: PBCT) has gained 24.16% year to date and 48.1% in the past year.
By the end of the second quarter of 2021, 24 hedge funds out of the 873 tracked by Insider Monkey held stakes in People’s United Financial, Inc. (NASDAQ: PBCT) worth roughly $219 million. This is compared to 20 hedge funds in the previous quarter with a total stake value of approximately $208 million.
Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), Target Corporation (NYSE: TGT) and Chevron Corporation (NYSE: CVX), People’s United Financial, Inc. (NASDAQ: PBCT) is a good stock to invest in.
7. International Business Machines Corporation (NYSE: IBM)
Number of Hedge Fund Holders: 41
Dividend Yield: 4.7%
Number of Years of Consistent Dividend Increases: 26
International Business Machines Corporation (NYSE: IBM) operates in the IT consulting industry and offers a range of integrated solutions and services. The company provides software for vertical and domain-specific solutions, customer information control systems and storage, and analytics and integration software solutions, among a range of other products and services. It ranks 7th on our list of the best dividend growth stocks to buy now.
Morgan Stanley holds an Equal Weight rating alongside a raised price target of $164, compared to the previous $152 price target, on shares of International Business Machines Corporation (NYSE: IBM) as of this July.
In the second quarter of 2021, International Business Machines Corporation (NYSE: IBM) had an EPS of $2.33, beating estimates by $0.04. The company’s revenue was $18.75 billion, up 3.43% year over year and beating estimates by $447.5 million. International Business Machines Corporation (NYSE: IBM) has gained 13.32% in the past 6 months and 12.65% year to date.
By the end of the second quarter of 2021, 41 hedge funds out of the 873 tracked by Insider Monkey held stakes in International Business Machines Corporation (NYSE: IBM) worth roughly $1.4 billion. This is compared to 41 hedge funds in the previous quarter with a total stake value of approximately $1.4 billion.
Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), Target Corporation (NYSE: TGT) and Chevron Corporation (NYSE: CVX), International Business Machines Corporation (NYSE: IBM) is a good stock to invest in.
6. Universal Health Realty Income Trust (NYSE: UHT)
Number of Hedge Fund Holders: 9
Dividend Yield: 4.77%
Number of Years of Consistent Dividend Increases: 36
Universal Health Realty Income Trust (NYSE: UHT) is a healthcare REIT investing in healthcare and human service-related facilities. The company ranks 6th on our list of the best dividend growth stocks to buy now. It has investments in about 71 properties in around 20 states in the US.
In the second quarter of 2021, Universal Health Realty Income Trust (NYSE: UHT) had an FFO of $0.92. The company’s revenue was $20.88 million, up 8.3% year over year.
By the end of the second quarter of 2021, 9 hedge funds out of the 873 tracked by Insider Monkey held stakes in Universal Health Realty Income Trust (NYSE: UHT) worth roughly $25 million. This is compared to 4 hedge funds in the previous quarter with a total stake value of approximately $24.5 million.
Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), Target Corporation (NYSE: TGT) and Chevron Corporation (NYSE: CVX), Universal Health Realty Income Trust (NYSE: UHT) is a good stock to invest in.
5. Chevron Corporation (NYSE: CVX)
Number of Hedge Fund Holders: 50
Dividend Yield: 5.54%
Number of Years of Consistent Dividend Increases: 34
Chevron Corporation (NYSE: CVX) works to explore, develop, and produce crude oil and natural gas, process, liquefy, and transport, liquified natural gas, and offer a range of other services within the energy sector. It ranks 5th on our list of the best dividend growth stocks to buy now.
As of this August, DZ Bank’s Werner Eisenmann has a Hold rating on shares of Chevron Corporation (NYSE: CVX) with a $110 price target.
In the second quarter of 2021, Chevron Corporation (NYSE: CVX) had an EPS of $1.71, beating estimates by $0.11. The company’s revenue was $37.60 billion, up 178.62% year over year and beating estimates by $1.15 billion. has gained 14.19% year to date and 10.93% in the past year.
By the end of the second quarter of 2021, 50 hedge funds out of the 873 tracked by Insider Monkey held stakes in Chevron Corporation (NYSE: CVX) worth roughly $4.3 billion. This is compared to 41 hedge funds in the previous quarter with a total stake value of approximately $4.9 billion.
4. Universal Corporation (NYSE: UVV)
Number of Hedge Fund Holders: 9
Dividend Yield: 6.3%
Number of Years of Consistent Dividend Increases: 50
Universal Corporation (NYSE: UVV) is among the global leaders in the tobacco industry and is based in Virginia. The company procures, finances, processes, packs, stores, and ships leaf tobacco for sale to manufacturers of consumer tobacco products. It ranks 4th on our list of the best dividend growth stocks to buy now.
In the fiscal first quarter of 2022, Universal Corporation (NYSE: UVV) had an EPS of $0.30. The company’s revenue was $350 million, up 10.8% year over year. Universal Corporation (NYSE: UVV) has gained 0.66% year to date and 8.1% in the past year.
By the end of the second quarter of 2021, 9 hedge funds out of the 873 tracked by Insider Monkey held stakes in Universal Corporation (NYSE: UVV) worth roughly $87 million. This is compared to 1o hedge funds in the previous quarter with a total stake value of approximately $93 million.
3. Exxon Mobil Corporation (NYSE: XOM)
Number of Hedge Fund Holders: 68
Dividend Yield: 6.3%
Number of Years of Consistent Dividend Increases: 38
Exxon Mobil Corporation (NYSE: XOM) is an energy company that manufactures, trades in, transports, and sells crude oil, natural gas, petroleum products, petrochemicals, and other specialty products. It ranks 3rd on our list of the best dividend growth stocks to buy now.
Phillip Jungwirth at BMO Capital began covering shares of Exxon Mobil Corporation (NYSE: XOM) this July with a Market Perform rating and a $69 price target, indicating a 21% upside.
In the second quarter of 2021, Exxon Mobil Corporation (NYSE: XOM) had an EPS of $1.10, beating estimates by $0.11. The company’s revenue was $67.74 billion, up 107.77% year over year and beating estimates by $3.02 billion. Exxon Mobil Corporation (NYSE: XOM) has gained 32.31% year to date and 30.06% in the past year.
By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in Exxon Mobil Corporation (NYSE: XOM) worth roughly $3.7 billion. This is compared to 65 hedge funds in the previous quarter with a total stake value of approximately $2.8 billion.
2. Altria Group, Inc. (NYSE: MO)
Number of Hedge Fund Holders: 47
Dividend Yield: 7.1%
Number of Years of Consistent Dividend Increases: 51
Altria Group, Inc. (NYSE: MO) is among the largest global producers and marketers of tobacco, cigarettes, and related products. Some of its brands include Marlboro and Black & Mild. It ranks 2nd on our list of the best dividend growth stocks to buy now.
Stifel analyst Christopher Growe reiterated his Buy rating and $56 price target on shares of Altria Group, Inc. (NYSE: MO) this July.
In the second quarter of 2021, Altria Group, Inc. (NYSE: MO) had an EPS of $1.23, beating estimates by $0.06. The company’s revenue was $5.61 billion, up 10.90% year over year and beating estimates by $250.80 million. Altria Group, Inc. (NYSE: MO) has gained 7.73% in the past 6 months and 18.71% year to date.
By the end of the second quarter of 2021, 47 hedge funds out of the 873 tracked by Insider Monkey held stakes in Altria Group, Inc. (NYSE: MO) worth roughly $948 million. This is compared to 38 hedge funds in the previous quarter with a total stake value of approximately $1.1 billion.
Broyhill Asset Management, an investment management firm, mentioned Altria Group, Inc. (NYSE: MO) in its second-quarter 2021 investor letter. Here’s what they said:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
1. AT&T Inc. (NYSE: T)
Number of Hedge Fund Holders: 68
Dividend Yield: 7.56%
Number of Years of Consistent Dividend Increases: 36
AT&T Inc. (NYSE: T) offers a range of communications and telecommunications services such as wireless voice and data communication services, video and targeted advertising services, broadband, legacy telephony internet and voice communication. It ranks 1st on our list of the best dividend growth stocks to buy now.
Bryan Kraft, a Deutsche Bank analyst, holds a Buy rating and a $37 price target on shares of AT&T Inc. (NYSE: T) as of this July.
In the second quarter of 2021, AT&T Inc. (NYSE: T) had an EPS of $0.89, beating estimates by $0.09. The company’s revenue was $44.05 billion, up 7.56% year over year and beating estimates by $1.32 billion.
By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in AT&T Inc. (NYSE: T) worth roughly $2.9 billion. This is compared to 63 hedge funds in the previous quarter with a total stake value of approximately $2.7 billion.
See also 10 Most Profitable Industries in the US and Top 10 High Growth Stocks To Buy in 2021.
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Disclosure: None. 10 Best Dividend Growth Stocks to Buy Now is originally published on Insider Monkey.
