In this article, we will take a look at some of the best dividend stocks for dependable dividend growth.
Dividend stocks continue to be a favored option among investors for their reliable income potential. Seasoned investors like Warren Buffett have long appreciated their value, as reflected by the significant number of dividend-paying companies in his portfolio. Though often overlooked, dividends have been a key contributor to long-term returns. From 1960 through the end of last year, about 85% of the market’s cumulative return came from reinvested dividends and compounding.
Dividend-focused strategies can add stability, provide regular income, and help cushion portfolios during economic uncertainty. They also tend to perform well during volatile periods. Historically, dividend-paying stocks have demonstrated strong resilience across various markets and time frames. A report from Franklin Templeton noted that over the three years ending December 31, 2024, these stocks saw lower volatility and smaller drawdowns than the broader market across US, global, and European equities. Last August, when inflation and interest rate worries returned, dividend stocks remained relatively steady.
Investors also favor companies with a history of raising dividends. According to Nuveen, firms that initiated or increased their payouts have generally outperformed in the three years following the first rate hike by the Federal Reserve. Although the Fed began cutting rates in 2024, the report suggested these cuts may slow in 2025 due to ongoing inflation pressures. Given this, we will take a look at some of the best dividend stocks for dependable dividend growth.
Our Methodology:
For this article, we scanned companies with strong dividend policies. From that list, we picked 10 companies with the highest 5-year annual average dividend growth rates. The stocks are ranked in ascending order of their annual average dividend growth in the past five years.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Evergy, Inc. (NASDAQ:EVRG)
5-Year Average Dividend Growth: 5.86%
Evergy, Inc. (NASDAQ:EVRG) is often overlooked among utility stocks, despite having a strong track record of dividend growth. The company has increased its dividend for 20 consecutive years, averaging nearly 6% annual growth over the past five years. In addition, the stock has a dividend yield of 4%, as of June 17. It is one of the best dividend stocks.
Analysts expect this upward trend to continue, supported by a solid business outlook. In February, Evergy, Inc. (NASDAQ:EVRG) revealed that its pipeline of large electricity customers, such as data centers, had grown to 11.2 GW, exceeding its current peak demand. To support this growth, the company raised its 2025–2029 capital spending plan by 8% to $17.5 billion.
Earnings-wise, Evergy, Inc. (NASDAQ:EVRG) reaffirmed its long-term adjusted EPS growth target of 4% to 6% through 2029, based on a 2025 midpoint of $4.02. Starting in 2026, the company expects to hit the higher end of that range. It also maintains a solid cash position, with trailing twelve-month operating cash flow exceeding $2 billion. The company currently offers a quarterly dividend of $0.6675 per share.
Evergy, Inc. (NASDAQ:EVRG) supplies electricity to 1.7 million customers across Kansas and Missouri through its subsidiaries: Evergy Kansas Central, Evergy Metro, and Evergy Missouri West.
9. Lockheed Martin Corporation (NYSE:LMT)
5-Year Average Dividend Growth: 6.7%
Citi expects Lockheed Martin Corporation (NYSE:LMT) to lead the S&P index in return on equity (ROE) next year. The defense contractor currently has an ROE of 9.6%, but that figure is projected to surge to 93.9% by the end of 2026, according to the firm’s estimates.
Last month, Lockheed Martin Corporation (NYSE:LMT) maintained its full-year guidance, supported by strong demand for its missile systems and fighter jets. Speaking to CNBC recently, COO Frank St. John noted that defense spending continues to rise in both Europe and the US. He made the following comment:
“We are probably in the beginning of a three-to-five year surge in defense spending.”
In addition to its profitability, Lockheed Martin Corporation (NYSE:LMT) is also grabbing investors’ attention because of its dividends. The company is committed to creating shareholder value by consistently increasing its dividend and reducing its outstanding share count. It has raised its payouts for 22 consecutive years, and its 5-year average annual dividend growth rate stands at nearly 7%.
Lockheed Martin Corporation (NYSE:LMT) currently offers a quarterly dividend of $3.30 per share and has a dividend yield of 2.75%, as of June 17.
Lockheed Martin Corporation (NYSE:LMT) is a leading global company in security and aerospace, focused on developing, producing, and integrating cutting-edge technology systems, especially for defense and space sectors.
