12 Best Dividend Growth Stocks With 10%+ Yearly Increases

Published on February 2, 2023 at 10:28 am by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we will 12 best discuss dividend growth stocks with 10% yearly increases. You can skip our detailed analysis of dividend companies and their returns over the years, and go directly to read 5 Best Dividend Growth Stocks With 10%+ Yearly Increases.

The historical analysis of dividend growers has shown their outperformance over other asset classes in periods of market turbulence. According to a report by T. Rowe Price, dividend growth stocks in the large-cap Russell 1000 index outperformed the benchmark during down and flat markets from 1985 to December 2020. Merrill Edge, a retail banking company, also highlighted the importance of dividend growers in one of its reports. Dividend Aristocrats— the companies that have raised their dividend for over 25 years— delivered an annual average return of 12.13% from 1990 through 2018, compared with a 9.96% return from the broader market during the same time.

Companies like Genuine Parts Company (NYSE:GPC), Nucor Corporation (NYSE:NUE), and Ecolab Inc. (NYSE:ECL) are some dividend stocks that have shown solid growth in their payouts over the years. This year so far, dividend stocks are exhibiting strong performance, grabbing investors’ attention. The S&P 500 High Dividend Index delivered a 6.21% return year-to-date, compared with a 5.99% return of the S&P 500, as of February 1.

Best Stocks Under $50

Our Methodology

For this article we first searched for stocks that have increased their dividends for at least five years in a row. Out of those companies, we shortlisted the stocks that have raised their dividends at an annual average rate of over 10% in the past five years. From the resultant dataset we picked 12 stocks with the highest number of hedge fund investors. The stocks are ranked in ascending order of their 5-year average annual dividend growth.

Best Dividend Growth Stocks With 10%+ Yearly Increases

12. Target Corporation (NYSE:TGT)

5-Year Average Annual Dividend Growth Rate: 11.7%

Years of Consistent Dividend Growth: 51

Target Corporation (NYSE:TGT) on January 12 declared a quarterly dividend of $1.08 per share, which fell in line with its previous dividend. It has been raising its dividends for 51 years in a row, with a 5-year annual average dividend growth of 11.7%. The stock’s dividend yield on February 1 came in at 2.51%. It is among the best dividend growth stocks on our list.

In January, Oppenheimer initiated its coverage of Target Corporation (NYSE:TGT) with an Outperform rating and a $190 price target. The firm sees potential in the company’s performance driven by gross margin expansion.

In addition to dividend stocks like Genuine Parts Company (NYSE:GPC), Nucor Corporation (NYSE:NUE), and Ecolab Inc. (NYSE:ECL), Target Corporation (NYSE:TGT) is also popular among investors due to its consistent dividend growth.

As per Insider Monkey’s Q3 2022 database, 52 hedge funds owned investments in Target Corporation (NYSE:TGT), jumping from 46 a quarter earlier. The consolidated value of stakes owned by these funds is over $2 billion.

Madison Funds mentioned Target Corporation (NYSE:TGT) in its Q4 2022 investor letter. Here is what the firm has to say:

“Despite having already addressed excess inventories, Target Corporation (NYSE:TGT) reported a disappointing third quarter and further cut fourth quarter guidance. Although sales were slightly better than expected, Target saw a slowdown in discretionary sales. Gross margins were below expectations with higher markdowns, increased shrink, and incremental costs. Long-term, we expect Target to be able to return to operating margins in the 6% to 8% range as inventories return to normal levels as well as seeing a normalization in supply chain costs.”

11. Extra Space Storage Inc. (NYSE:EXR)

5-Year Average Annual Dividend Growth Rate: 14%

Years of Consistent Dividend Growth: 12

Extra Space Storage Inc. (NYSE:EXR) is a real estate investment trust company that invests in self-storage facilities. The company is based in Utah, US. In 2022, the company’s cash position remained strong as it had nearly $87 million in cash and cash equivalents at the end of September. Its total assets amounted to over $11.8 billion.

Extra Space Storage Inc. (NYSE:EXR) is one of the best dividend growth stocks on our list with as it has raised its dividend at an annual average rate of 14% in the past five years. Moreover, the company maintains a 12-year streak of consistent dividend growth. It currently offers a quarterly dividend of $1.50 per share and has a dividend yield of 3.80%, as of February 1.

Raymond James appreciated the occupancy over rate strategy of Extra Space Storage Inc. (NYSE:EXR) during a market downturn. Given this, the firm upgraded the stock to Outperform in January with a $170 price target.

As of the end of September 2022, 27 hedge funds tracked by Insider Monkey reported owning stakes in Extra Space Storage Inc. (NYSE:EXR), the same as in the previous quarter. The collective value of these stakes is roughly $148 million.

Baron Funds mentioned Extra Space Storage Inc. (NYSE:EXR) in its Q2 2022 investor letter. Here is what the firm has to say:

“Following a sharp correction in its share price during the second quarter, we acquired shares in Extra Space Storage Inc. This REIT has assembled the second-largest self-storage portfolio in the country and has the largest portfolio of third-party managed self-storage facilities. In our opinion, Extra Space’s management team is excellent. Over the last decade, management has delivered strong occupancy gains, rent growth, and expense control that has led to a cost of capital advantage relative to its peers. Management has capitalized on its cost of capital advantage by tripling its owned self-storage count since 2010. We believe the long-term growth opportunity for the company remains strong.”

10. BlackRock, Inc. (NYSE:BLK)

5-Year Average Annual Dividend Growth Rate: 14.3%

Years of Consistent Dividend Growth: 14

BlackRock, Inc. (NYSE:BLK) is a New York-based multinational investment management company that provides services in risk management and fixed income. In January, BofA maintained a Buy rating on the stock with an $813 price target, presenting a positive outlook on the sector.

On January 25, BlackRock, Inc. (NYSE:BLK) declared a 2.4% hike in its quarterly dividend to $5.00 per share. This was the company’s 14th consecutive year of dividend growth, which makes it one of the best dividend growth stocks on our list. Moreover, it has raised its dividend at an annual average rate of 14.3% in the past five years. The company’s shares yield at 2.63%, as of February 1.

In the fourth quarter of 2022, BlackRock, Inc. (NYSE:BLK) reported revenue of $4.34 billion, which beat Street estimates by $70 million. The company’s assets under management amounted to $8.59 trillion, up from $7.96 trillion in the previous quarter.

At the end of Q3 2022, BlackRock, Inc. (NYSE:BLK) was a part of 46 hedge fund portfolios, as per Insider Monkey’s database. The collective value of stakes owned by these funds is over $1.76 billion.

Madison Funds mentioned BlackRock, Inc. (NYSE:BLK) in its Q4 2022 investor letter. Here is what the firm has to say:

“BlackRock, Inc. (NYSE:BLK) stock benefited from the strong stock market during the fourth quarter. Although markets have been challenging for BlackRock, with headwinds from both the equity and fixed income markets, the company remains well positioned for improving fixed income demand in 2023 and has also gained traction in the alternatives space.”

9. Packaging Corporation of America (NYSE:PKG)

5-Year Average Annual Dividend Growth Rate: 14.7%

Years of Consistent Dividend Growth: 11

Packaging Corporation of America (NYSE:PKG) is an American manufacturing company that specializes in the production of corrugated packaging products. The company maintains an 11-year streak of consistent dividend growth and has a 5-year average annual dividend growth rate of 14.7%. It currently pays a quarterly dividend of $1.25 per share and has a dividend yield of 3.50%, as of February 1. The company is among the best dividend growth stock on our list.

In January, Truist raised its price target on Packaging Corporation of America (NYSE:PKG) to $144 and maintained a Buy rating on the shares. The firm highlighted the company’s recent quarterly earnings and its strong sales.

At the end of Q3 2022, 27 hedge funds tracked by Insider Monkey owned stakes in Packaging Corporation of America (NYSE:PKG), up from 26 in the previous quarter. These stakes have a total value of roughly $176 million. Among these funds, AQR Capital Management was the company’s leading stakeholder in Q3.

8. T. Rowe Price Group, Inc. (NASDAQ:TROW)

5-Year Average Annual Dividend Growth Rate: 16.05%

Years of Consistent Dividend Growth: 36

T. Rowe Price Group, Inc. (NASDAQ:TROW) is a Maryland-based investment management company that offers a wide range of investment plans and services to institutional and individual clients. At the end of 2022, the company’s assets under management amounted to over $1.27 trillion. Its revenue for the year came in at $6.5 billion.

Following the company’s Q4 earnings, Deutsche Bank maintained a Hold rating on T. Rowe Price Group, Inc. (NASDAQ:TROW) in January with a $113 price target.

T. Rowe Price Group, Inc. (NASDAQ:TROW) has a 5-year average annual dividend growth rate of 16.05%. The company has been rewarding shareholders with increased dividends for the past 36 years, which makes it one of the best dividend growth stocks. It currently pays a quarterly dividend of $1.20 per share and has a dividend yield of 4.12%, as of February 1.

Out of the 920 hedge funds tracked by Insider Monkey, 30 funds owned stakes in T. Rowe Price Group, Inc. (NASDAQ:TROW) in Q3 2022, compared with 27 in the previous quarter. The collective value of these stakes is roughly $320 million.

7. The Home Depot, Inc. (NYSE:HD)

5-Year Average Annual Dividend Growth Rate: 16.4%

Years of Consistent Dividend Growth: 12

The Home Depot, Inc. (NYSE:HD) is an American home improvement company, based in Georgia. The company sells home improvement tools and other construction-related products. The company offers a quarterly dividend of $1.90 per share and has a dividend yield of 2.34%, as of February 1. It has been raising its dividend for the past 12 years with a 5-year average annual dividend growth rate of 16.4%. The company’s consistently growing payouts make it one of the best dividend growth stocks.

In December, Cowen raised its price target on The Home Depot, Inc. (NYSE:HD) to $379 with an Outperform rating on the shares. The firm appreciated the company’s ‘best-in-class’ retail execution.

At the end of September, 89 hedge funds in Insider Monkey’s database owned stakes in The Home Depot, Inc. (NYSE:HD), growing from 80 in the previous quarter. These stakes are collectively valued at over $5.6 billion. With over 8 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.

Matrix Asset Advisors mentioned The Home Depot, Inc. (NYSE:HD) in its Q3 2022 investor letter. Here is what the firm has to say:

“During the quarter, we re-established a position in The Home Depot, Inc. (NYSE:HD) sold earlier this year, after the shares declined sharply on big picture concerns about a softer housing market and lower consumer spending. We believe that HD is a very well-managed company, positioned to continue showing good profits even as the economy decelerates. The products it carries in inventory are in year-round demand from contractors and homeowners wanting to maintain and improve their homes. The company has historically been shareholder friendly, repurchasing shares and increasing the dividend, most recently by 15% earlier this year. On September 30, HD’s current dividend yield was 2.8%.”

6. Union Pacific Corporation (NYSE:UNP)

5-Year Average Annual Dividend Growth Rate: 16.5%

Years of Consistent Dividend Growth: 15

Union Pacific Corporation (NYSE:UNP) is a Nebraska-based transport company that covers 23 states in the western two-thirds of the US. On December 9, the company declared a quarterly dividend of $1.30 per share, which fell in line with its previous dividend. In the past five years, it has raised its dividend at an annual average rate of 16.5%. Moreover, the company maintains a 15-year streak of dividend growth. As of February 1, the stock has a dividend yield of 2.55%.

Union Pacific Corporation (NYSE:UNP) can be added to dividend portfolios alongside Genuine Parts Company (NYSE:GPC), Nucor Corporation (NYSE:NUE), and Ecolab Inc. (NYSE:ECL).

In Q4 2022, Union Pacific Corporation (NYSE:UNP) reported revenue of $6.2 billion, which showed an 8.2% growth from the same period last year. At the end of December 31, the company had $973 million in cash and cash equivalents, up from $960 in a year-ago period.

Cowen mentioned Union Pacific Corporation (NYSE:UNP) in its January investors’ note and mentioned that the company could manage growing inflation by improving services and outstripping cost pressures. Given this, the firm raised its price target on the stock to $22 with an Outperform rating on the shares.

Union Pacific Corporation (NYSE:UNP) was a popular stock among hedge funds in Q3 2022, as 74 funds tracked by Insider Monkey owned stakes in the company, up from 65 in the previous quarter. These stakes have a collective value of over $6.4 billion.

Diamond Hill Capital Management mentioned Union Pacific Corporation (NYSE:UNP) in its Q2 2022 investor letter. Here is what the firm has to say:

“Union Pacific Corporation (NYSE:UNP) is a large railroad company that carries freight across the western US and between Canada and Mexico. It transports a variety of industrial goods, raw materials and containerized freight between major US ports, industrial hubs and international gateways. The goods that Union Pacific and other railroads transport are fundamental inputs in the economy and are resilient to long-term trends in the business cycle. We believe Union Pacific offers a compelling investment opportunity as its substantial infrastructure investments, relative cost advantages, limited leverage and the essential nature of the products it delivers provides the company with what we believe is one of the widest moats in the transportation sector. We also like that Union Pacific has a shareholder-oriented management team that is focused on growing earnings while returning capital to shareholders.”

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