In this article, we discuss 14 best large-cap dividend growth stocks to buy now. You can skip our detailed analysis of large-cap dividend stocks and their historical performance, and go directly to read 5 Best Large Cap Dividend Growth Stocks To Buy Now.
Large-cap stocks have remained ideal for investors as they typically form the core of widely used index funds and are familiar names to both casual traders and financial experts. In addition to this, large-cap companies have proven their resilience during periods of financial instability. This is largely due to the fact that these companies are well-established with ample cash reserves, which enables them to navigate through market downturns smoothly. In 2023, the market rally was led by large-cap stocks, particularly by the ‘Magnificent Seven’, despite investors expecting more challenges for both the stock and bond markets following the turbulence of 2022. The Russell 1000 Index has gained 6.13% in 2024 so far. The index tracks the performance of the largest 1000 companies in the US based on market capitalization. It is currently outperforming a small-cap Russell 2000 Index, which has declined by 2.25% since the start of the year.
Due to their strong financials and stability, large-cap stocks have delivered strong returns over the years. JPMorgan Wealth Management reported that these equities contribute to capital appreciation for investors over the long term. In addition to this, large-cap stocks produced a 162% trailing 10-year return from 2013 to March 2023, compared with 139% and 108% returns of mid-cap and small-cap stocks during the same period.
The strength of large-cap stocks can be illustrated in their capacity to raise dividends even during market turmoil. For example, companies like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and Colgate-Palmolive Company (NYSE:CL) have raised their payouts for decades, remaining durable even through major economic downturns like the 2008 recession and the 2020 pandemic. According to a report by T. Rowe Price, large-cap companies that consistently grow their dividends have shown strength during market downturns, experiencing smaller losses compared to the overall market. In addition to this, they have tended to outperform when the market remains stagnant and have captured a significant portion of gains during bullish periods. The report further mentioned that from 1985 to 2022, dividend-growing companies within the Russell 1000 Index surpassed the performance of the broader benchmark while also demonstrating lower levels of volatility.
Overall, dividend growth stands out as one of the most important factors to consider when making investments in dividend stocks. These securities have outperformed their non-dividend peers over the years. We referred to data by Abrdn in one of our articles on the subject and highlighted that dividend growers and initiators delivered a compounded return of 10.68% from December 2002 to December 2022, surpassing a 2.70% return of those that cut or eliminated their dividends during this period. Also, companies that did not pay dividends also lagged behind dividend growers and returned 9.25% within this timeframe.
In times of financial instability, investors often turn to companies that have solid cash generation and regularly grow their dividends. In this article, we will take a look at some of the best dividend growth stocks within the large-cap space.
Image by Steve Buissinne from Pixabay
Our Methodology:
For this list, we first used a stock screener to identify large-cap dividend stocks with market capitalization above $10 billion. From that list, we shortlisted stocks that have 5-year average dividend growth rates of above 10%. The stocks are ranked in ascending order of their dividend growth rates. Data from over 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
14. American Express Company (NYSE:AXP)
5-Year Dividend Growth Rate: 10.46%
American Express Company (NYSE:AXP) is an American multinational financial services company that provides a wide range of related services to its consumers. On March 6, the company declared a 17% hike in its quarterly dividend to $0.70 per share. This was the company’s second dividend growth this year. In the past five years, it has raised its dividends at an annual average rate of 10.46%, which makes AXP one of the best dividend stocks on our list. The stock has a dividend yield of 1.28%, as of April 17.
At the end of Q4 2023, 64 hedge funds tracked by Insider Monkey reported having stakes in American Express Company (NYSE:AXP), compared with 74 in the previous quarter. The collective value of these stakes is over $31.8 billion. Among these hedge funds, Berkshire Hathaway was the company’s leading stakeholder in Q4.
13. Target Corporation (NYSE:TGT)
5-Year Dividend Growth Rate: 11.5%
Target Corporation (NYSE:TGT) is a Minnesota-based retail company that operates a chain of department stores and hypermarkets. The company declared a quarterly dividend of $1.10 per share on March 13, which was in line with its previous dividend. It has been growing its dividends for the past 52 years and its annual average dividend growth rate comes in at 11.5% in the past five years. With a dividend yield of 2.69% as of April 17, TGT is one of the best dividend stocks on our list.
As of the end of Q4 2023, 58 hedge funds in Insider Monkey’s database held stakes in Target Corporation (NYSE:TGT), which remained unchanged from the previous quarter. These stakes have a total value of over $1.5 billion.
12. United Parcel Service, Inc. (NYSE:UPS)
5-Year Dividend Growth Rate: 11.97%
United Parcel Service, Inc. (NYSE:UPS) is next on our list of the best dividend stocks with high growth rates. The American multinational shipping company provides logistics and transportation services to a wide range of businesses and consumers. The company pays a quarterly dividend of $1.63 per share, having raised it by 0.6% in January this year. This marked its 22nd consecutive annual dividend hike. Overall, the company has raised its payouts by nearly 12% on average in the past five years. The stock supports a dividend yield of 4.56%, as of April 17.
The number of hedge funds tracked by Insider Monkey owning stakes in United Parcel Service, Inc. (NYSE:UPS) grew to 46 in Q4 2023, from 42 in the previous quarter. These stakes are valued at over $2 billion in total. With over 8 million shares, Viking Global was the company’s leading stakeholder in Q4.
11. Accenture plc (NYSE:ACN)
5-Year Dividend Growth Rate: 12.33%
Accenture plc (NYSE:ACN) is an American multinational professional services company that offers consulting, technology, and outsourcing services to its consumers. On March 21, the company declared a quarterly dividend of $1.29 per share, which was in line with its previous dividend. It has never missed a dividend since 2005 and has raised its payouts at an annual average rate of 12.33% over the past five years. The stock has a dividend yield of 1.64%, as of April 17.
At the end of December 2023, 58 hedge funds in Insider Monkey’s database held stakes in Accenture plc (NYSE:ACN), growing from 55 in the previous quarter. The collective value of these stakes is roughly $2.4 billion. Among these hedge funds, GuardCap Asset Management was the company’s leading stakeholder in Q4.
10. Parker-Hannifin Corporation (NYSE:PH)
5-Year Dividend Growth Rate: 14.27%
Parker-Hannifin Corporation (NYSE:PH) is an Ohio-based manufacturing company that specializes in motion and control technologies and systems. It is one of the best dividend stocks on our list as the company holds one of the longest dividend growth track records in the market, spanning over 66 years. Moreover, in the past five years, it has raised its dividends at an annual average rate of 14.27%. It currently offers a quarterly dividend of $1.48 per share and has a dividend yield of 1.09%, as of April 17.
Parker-Hannifin Corporation (NYSE:PH) was a popular buy among hedge funds in Q4 2023 with 63 funds tracked by Insider Monkey owning stakes in the company, up significantly from 52 in the previous quarter. The consolidated value of these stakes is more than $1.64 billion.
9. Elevance Health, Inc. (NYSE:ELV)
5-Year Dividend Growth Rate: 14.76%
Elevance Health, Inc. (NYSE:ELV) is an American multinational health insurance company, previously known as Anthem. The company has been growing its dividends consistently for the past 12 years and currently offers a quarterly dividend of $1.63 per share. The stock has a dividend yield of 1.29%, as of April 17. With a 5-year average dividend growth rate of 14.76%, ELV is one of the best dividend stocks on our list.
Insider Monkey’s database of Q4 2023 indicated that 83 hedge funds held stakes in Elevance Health, Inc. (NYSE:ELV), which remained unchanged from the previous quarter. The total worth of these stakes is more than $5.8 billion.
8. Eli Lilly and Company (NYSE:LLY)
5-Year Dividend Growth Rate: 14.97%
Eli Lilly and Company (NYSE:LLY) is an Indiana-based multinational pharmaceutical company that specializes in a wide range of medicines and devices. The company has been paying regular dividends to shareholders since 1885 and has raised its payouts for 10 years straight. In the past five years, the company has raised its payouts at an annual average rate of nearly 15%, which makes LLY one of the best dividend stocks on our list. As of April 17, the stock has a dividend yield of 0.69%.
At the end of Q4 2023, 102 hedge funds in Insider Monkey’s database reported having stakes in Eli Lilly and Company (NYSE:LLY), the same as in the previous quarter. These stakes are valued at over $11 billion in total. With over 4.5 million shares, Fisher Asset Management was the company’s leading stakeholder in Q4.
7. Visa Inc. (NYSE:V)
5-Year Dividend Growth Rate: 16.09%
Visa Inc. (NYSE:V) is an American credit card service company that also facilitates electronic funds transfers throughout the world. On January 25, the company declared a quarterly dividend of $0.52 per share, which was consistent with its previous dividend. Overall, it has raised its dividends for the past 15 years with a 5-year average dividend growth rate of over 16%. The stock’s dividend yield on April 17 came in at 0.76%.
As of the end of December 2023, 162 hedge funds held stakes in Visa Inc. (NYSE:V), compared with 167 in the previous quarter, as per Insider Monkey’s database. The consolidated value of these stakes is over $26.5 billion.
6. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Dividend Growth Rate: 18.65%
Lowe’s Companies, Inc. (NYSE:LOW) ranks sixth on our list of the best dividend stocks with strong dividend growth. The American retailer has raised its dividends for 59 years running and offers a quarterly dividend of $1.10 per share. Over the past five years, the company has raised its payouts at an annual average rate of 18.6%. The stock supports a dividend yield of 1.92%, as of April 17.
According to Insider Monkey’s database of Q4 2023, 68 hedge funds held stakes in Lowe’s Companies, Inc. (NYSE:LOW), growing from 63 in the preceding quarter. The stakes are worth over $3.7 billion. Among these hedge funds, Soroban Capital Partners was the company’s leading stakeholder in Q4.
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Disclosure. None. 14 Best Large Cap Dividend Growth Stocks To Buy Now is originally published on Insider Monkey.