In this article, we will take a look at some of the next generation dividend aristocrat stocks.
The next generation of dividend aristocrats can often be spotted through their consistent dividend growth, solid starting yields, and overall stability, even if they haven’t yet hit the 25-year mark of annual increases. While traditional dividend stocks— both established and emerging— remain reliable investments, many other sectors also present strong dividend opportunities with varied growth and return profiles that support both income generation and diversification.
Midstream energy companies and modern REITs, for example, offer appealing dividends linked to unique growth trends. Meanwhile, tech firms are becoming more dividend-friendly, making the sector an increasingly promising space for income-focused investors.
According to a report by ClearBridge Investments, many of these up-and-coming dividend aristocrats are already delivering impressive returns. In some cases, an initial $10,000 investment at the start of their dividend growth streak is now generating nearly that amount annually in dividends alone. Even though they haven’t yet earned the official “dividend aristocrat” title, their strong performance highlights why they deserve a place in a thoughtfully built income-focused portfolio today.
Given this, we will take a look at some of the best next generation dividend aristocrat stocks.
Our Methodology:
For this article, we scanned for companies that have raised their dividends between 10-24 years consistently. From the resultant list, we picked 15 stocks with the highest number of hedge fund investors, as per Insider Monkey’s database of Q1 2025. The stocks are ranked in ascending order of hedge funds having stakes in them.
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).
15. Tractor Supply Company (NASDAQ:TSCO)
Number of Hedge Fund Holders: 37
Tractor Supply Company (NASDAQ:TSCO) is one of the best next generation dividend aristocrat stocks. The company continued to deliver solid returns to its shareholders, distributing over $1 billion in fiscal year 2024. This included $472.5 million in dividends and $560.8 million spent on share buybacks. With a dividend payout ratio of around 43%, the company maintains a healthy balance between rewarding investors and preserving capital for future growth.
In the first quarter of 2025, Tractor Supply Company (NASDAQ:TSCO) returned another $216.4 million to shareholders, $122.4 million through cash dividends and $94 million via the repurchase of approximately 1.7 million shares. These returns were supported by strong cash flow, with the company generating $216.7 million in operating cash during the quarter.
On May 15, Tractor Supply Company (NASDAQ:TSCO) announced a quarterly dividend of $0.23 per share, consistent with the previous payout. It has now increased its dividend for 16 straight years. The stock supports a dividend yield of 1.79%, as of June 14.
Tractor Supply Company (NASDAQ:TSCO) is one of the largest rural lifestyle retailers in the United States. With a legacy spanning over 85 years, the company has remained committed to meeting the needs of hobby farmers, ranchers, homeowners, gardeners, pet lovers, and anyone who embraces the “Life Out Here” way of living.
14. Cummins Inc. (NYSE:CMI)
Number of Hedge Fund Holders: 53
Cummins Inc. (NYSE:CMI) is among the best next generation dividend aristocrat stocks. Many income-focused investors tend to overlook Cummins as a dividend stock, often recognizing it solely for its role as a leading manufacturer of diesel and natural gas engines. However, the company is a reliable dividend payer with strong potential for future growth in distributions.
Cummins Inc. (NYSE:CMI) has laid out a firm commitment to shareholder returns. In its FY24 earnings report, the company reiterated its goal of returning 50% of its operating cash flow to shareholders over the long term. In 2024 alone, it distributed $969 million in dividends, backed by over $1.4 billion in operating cash flow, highlighting the strength of its financial foundation.
Beyond the numbers, Cummins Inc. (NYSE:CMI) has raised its dividend for 15 straight years, positioning it as a serious contender for future Dividend Aristocrat status.
Despite facing a legal challenge in 2023, the company made notable progress in 2024. It exited its filtration business, partnered with Isuzu to launch a new engine for Japan’s medium-duty trucks, and introduced new products aimed at the high-growth data center market, signaling a year of strategic transformation and forward momentum.
Cummins Inc. (NYSE:CMI) offers a quarterly dividend of $1.82 per share and has a dividend yield of 2.28%, as of June 14.
Cummins Inc. (NYSE:CMI), a global leader in power solutions, operates through five key business segments: Engine, Components, Distribution, Power Systems, and its clean energy division, Accelera by Cummins.
13. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 64
The Kroger Co. (NYSE:KR) is one of the best next generation dividend aristocrat stocks. The company’s dividend profile has become increasingly appealing to income-focused investors, with strong potential for continued growth.
Over the past five years, The Kroger Co. (NYSE:KR) has doubled its quarterly dividend to $0.32 per share, resulting in a yield of 1.9%. Management has signaled that further increases are likely, backed by an ongoing share repurchase program aimed at delivering an annual shareholder return of 5% to 6%, a strategy that could also support future stock appreciation.
These dividends are supported by healthy free cash flow. For fiscal year 2025, The Kroger Co. (NYSE:KR) projects adjusted free cash flow between $2.8 billion and $3.0 billion, reinforcing its commitment to boosting dividends and enhancing shareholder returns. In FY24 alone, it distributed $883 million in dividends to shareholders.
The Kroger Co. (NYSE:KR) has been growing its dividends for the past 18 consecutive years.
The Kroger Co. (NYSE:KR), commonly known as Kroger, is an American retail giant that runs a wide network of supermarkets and multi-department stores across the country.
