15 Dividend Growth Stocks with the Highest Growth Rates

Published on February 13, 2023 at 4:03 pm by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 15 dividend growth stocks with the highest growth rates. You can skip our detailed analysis of dividend growers and their performance over the years, and go directly to read 5 Dividend Growth Stocks with the Highest Growth Rates.

Dividend-growing companies have histories of consistently increasing their dividend payments, which is particularly beneficial for income investors. Historical returns of dividend stocks have also shown that they have lower price volatility compared to non-dividend stocks.

Continuous changes in monetary policies in 2022 altered investor sentiment and brought dividend securities into the limelight. Though S&P 500 declined by over 18% last year, dividend companies remained on strong footing, rewarding investors with stable returns. According to a report by ProShares, the S&P 500 Dividend Aristocrats Index fell by just 6.21% in 2022 and the S&P MidCap 400 Index reported a 0.11% drop, versus a harsher decline of the wider market. Similarly, Russell 2000 Dividend Growth Index plunged by 5.44% as compared with a negative 20.44 return of the Russell 2000 Index. These numbers show that dividend growth strategies outperformed the broader market in large-, small-, and mid-cap spaces in the US. Some companies that have consistently raised their dividends include AbbVie Inc. (NYSE:ABBV), The Coca-Cola Company (NYSE:KO), and Becton, Dickinson and Company (NYSE:BDX).

Another report by Allspring Global Investments also highlighted the positive performance of dividend stocks over time. The report mentioned that dividend growers delivered the best risk/return relation in 30 years ending December 2020.

Photo by Dan Dennis on Unsplash

Our Methodology:

We first listed down stocks from the Dividend Aristocrats group, the companies that have raised their dividends for 25 years or more. From these stocks, we shortlisted companies with dividend growth rates of at least 8% in the past 12 months. These growth rates go up to 31%, as you will see in the article. The stocks are ranked in ascending order of their dividend growth rates.

Dividend Growth Stocks with the Highest Growth Rates

15. Caterpillar Inc. (NYSE:CAT)

12-Month Dividend Growth Rate: 8.1%

Caterpillar Inc. (NYSE:CAT) specializes in the production of construction equipment. The company is based in Texas, US. For Q4 2022, it reported strong results with revenue of $16.6 billion, which showed a 20.3% growth from the same period last year. For FY22, the company generated $7.8 billion in operating cash flow and returned $6.7 billion to shareholders through dividends and share repurchases. The company has a strong payout ratio of 36.5%.

Caterpillar Inc. (NYSE:CAT) currently pays a quarterly dividend of $1.20 per share and has a dividend yield of 1.94%, as of February 13. The company has been raising its dividends consistently for the past 28 years with a 12-month dividend growth of 8.1%. It is among the best dividend growth stocks on our list.

In addition to dividend stocks like AbbVie Inc. (NYSE:ABBV), The Coca-Cola Company (NYSE:KO), and Becton, Dickinson and Company (NYSE:BDX), Caterpillar Inc. (NYSE:CAT) is also among investors’ preferred dividend stocks.

Following the company’s recent quarterly earnings, Credit Suisse raised its price target on Caterpillar Inc. (NYSE:CAT) in February to $306 with an Outperform rating on the shares.

At the end of Q3 2022, 43 hedge funds tracked by Insider Monkey owned stakes in Caterpillar Inc. (NYSE:CAT), compared with 45 in the previous quarter. These stakes are valued at over $2.8 billion collectively. Among these hedge funds, Bill & Melinda Gates Foundation Trust was the company’s leading stakeholder in Q3.

Diamond Hill Capital mentioned Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter. Here is what the firm had to say:

“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”

14. Abbott Laboratories (NYSE:ABT)

12-Month Dividend Growth Rate: 8.5%

Another best dividend growth stock on our list is Abbott Laboratories (NYSE:ABT), which is an American medical device and healthcare company. In January, Barclays raised its price target on the stock to $125 with an Overweight rating on the shares as the company reported growth in its medical device business.

Abbott Laboratories (NYSE:ABT) currently pays a quarterly dividend of $0.51 per share and has a dividend yield of 1.89%, as of February 13. The company has a run of 51 years of consistent dividend growth. In the past 12 months, it has raised its payouts by 8.5%.

At the end of September, 62 hedge funds tracked by Insider Monkey reported having stakes in Abbott Laboratories (NYSE:ABT), up from 61 in the previous quarter. The collective value of these stakes is over $3 billion.

Vulcan Value Partners mentioned Abbott Laboratories (NYSE:ABT) in its Q4 2022 investor letter. Here is what the firm has to say:

“Abbott Laboratories (NYSE:ABT) is one of the largest and most diversified health care companies in the world. It operates in four segments: diagnostics, medical devices, nutritional products and established pharmaceuticals. The company quickly established itself as a global leader in the development and deployment of COVID-19 rapid diagnostic tests. Consequently, its revenue and profit growth accelerated during the pandemic. As demand for testing slowed to a more sustainable level, the company is facing difficult earnings comparisons. In addition, Abbott voluntarily recalled certain infant formula products and shut down a plant in Michigan where the products were manufactured, which put more pressure on its earnings comparisons. The plant has resumed production, and Abbott is regaining lost market share. We believe that these events, one positive and one negative, have distorted Abbott’s sustainable earning power and has given us an opportunity to purchase it with a margin of safety.”

13. Cincinnati Financial Corporation (NASDAQ:CINF)

12-Month Dividend Growth Rate: 8.7%

Cincinnati Financial Corporation (NASDAQ:CINF) is an Ohio-based insurance company that provides services in property and casualty insurance. In the past 12 months, the company has raised its dividend by 8.7%, which makes it one of the best dividend growth stocks on our list. Moreover, the company holds a 62-year streak of consistent dividend growth. It pays a quarterly dividend of $0.75 per share and has a dividend yield of 2.40%, as of February 13.

RBC Capital raised its price target on Cincinnati Financial Corporation (NASDAQ:CINF) to $125 in February and maintained a Sector Perform rating on the shares. The firm appreciated the company’s guidance for 2023.

In the fourth quarter of 2022, Cincinnati Financial Corporation (NASDAQ:CINF) reported a 12% year-over-year growth in its earned premiums of $1.87 billion. At the end of December 2022, the company had over $23.6 billion available in consolidated cash and invested assets.

As of the close of Q3 2022, 18 hedge funds in Insider Monkey’s database owned stakes in Cincinnati Financial Corporation (NASDAQ:CINF), compared with 22 in the previous quarter. The collective value of these stakes is over $73.6 million.

12. Atmos Energy Corporation (NYSE:ATO)

12-Month Dividend Growth Rate: 8.8%

Atmos Energy Corporation (NYSE:ATO) is a Texas-based company that specializes in the distribution of natural gas. On February 7, the company declared a quarterly dividend of $0.74 per share, which fell in line with its previous dividend. It has raised its dividend by 8.8% in the past 12 months and also maintains a 38-year streak of consistent dividend growth. The stock’s dividend yield on February 13 came in at 2.55%.

In fiscal Q1 2023, Atmos Energy Corporation (NYSE:ATO) reported revenue of $1.48 billion, which showed a 46.5% growth from the same period last year. The company’s operating cash flow for the quarter came in at $188.9 million, up from $61.8 million in the prior-year quarter.

Mizuho appreciated the company’s performance in the current challenging environment and raised its price target on Atmos Energy Corporation (NYSE:ATO) in February to $137 with a Buy rating on the shares.

As of the close of Q3 2022, 23 hedge funds in Insider Monkey’s database reported having stakes in Atmos Energy Corporation (NYSE:ATO), up from 21 in the previous quarter. These stakes have a consolidated value of over $293 million.

Aristotle Capital Management mentioned Atmos Energy Corporation (NYSE:ATO) in its Q1 2022 investor letter. Here is what the firm has to say:

“Headquartered in Dallas, Atmos Energy is the largest fully regulated natural gas-only utility in the U.S. It serves over three million distribution customers across eight states, primarily in the South. Approximately 70% of its revenue comes from Texas, where it owns one of the largest natural gas pipeline systems in the state. (Click here to view the full text)

11. The Sherwin-Williams Company (NYSE:SHW)

12-Month Dividend Growth Rate: 9.1%

The Sherwin-Williams Company (NYSE:SHW) manufactures coatings and painting materials. The company is headquartered in Ohio, US. In Q4 2022, it posted revenue of $5.23 billion, which saw a 9.9% growth from the same period last year. During FY22, the company returned $619 million to shareholders in dividends.

The Sherwin-Williams Company (NYSE:SHW) has been raising its dividends consistently for the past 43 years. In the past 12 months, the company has raised its payout by 9.1%, coming through as one of the best dividend growth stocks. It pays a quarterly dividend of $0.60 per share and has a dividend yield of 1.04%, as of February 13.

In January, RBC Capital maintained an Outperform rating on The Sherwin-Williams Company (NYSE:SHW) with a $267 price target.

At the end of September 2022, 63 hedge funds tracked by Insider Monkey owned stakes in The Sherwin-Williams Company (NYSE:SHW), up from 52 in the previous quarter. The consolidated value of these stakes is over $2.8 billion. With roughly 2 million shares, D1 Capital Partners was the company’s leading stakeholder in Q3.

10. Genuine Parts Company (NYSE:GPC)

12-Month Dividend Growth Rate: 9.8%

Genuine Parts Company (NYSE:GPC) is an American company that deals in the distribution of automotive, industrial, and office products. The company offers a per-share dividend of $0.895 every quarter and has a dividend yield of 2.07%, as of February 13. In the past 12 months, it has raised its payout by 9.8% and overall holds a 66-year track record of consistent dividend growth. The company is among the best dividend growth stocks on our list.

As of the close of Q3 2022, 36 hedge funds in Insider Monkey’s database owned stakes in Genuine Parts Company (NYSE:GPC), up from 32 in the previous quarter. The collective value of these stakes is over $474 million.

Carillon Tower Advisers mentioned Genuine Parts Company (NYSE:GPC) in its Q3 2022 investor letter. Here is what the firm has to say:

“Genuine Parts Company (NYSE:GPC) operates two global distribution businesses, one focused on automotive replacement parts and the other focused on industrial replacement parts. Both businesses experienced strong same store sales growth and margin expansion in the prior quarter, as demand continued to rebound from pandemic lows.”

9. Roper Technologies, Inc. (NYSE:ROP)

12-Month Dividend Growth Rate: 10.1%

Roper Technologies, Inc. (NYSE:ROP) is a Florida-based diversified industrial company that mainly produces engineered products. In Q4 2022, the company reported an adjusted operating cash flow of $476 million. Its revenue for the quarter came in at $1.43 billion, which showed a 14.4% growth from the same period last year.

Wells Fargo covered Roper Technologies, Inc. (NYSE:ROP) in its October investors’ note and mentioned that the company’s performance continues to stand out against a volatile market. Given this, the firm raised its price target on the stock to $540 with an Overweight rating on the shares.

In the past 12 months, Roper Technologies, Inc. (NYSE:ROP) has raised its dividend by 10.1% and currently pays a quarterly dividend of $0.6825 per share. In 2022, the company extended its dividend growth streak to 31 years. As of February 13, this dividend growth stock has a yield of 0.64%.

As per Insider Monkey’s Q3 2022 database, 44 hedge funds owned stakes in Roper Technologies, Inc. (NYSE:ROP), compared with 48 in the previous quarter. The collective value of these stakes is nearly $2 billion. With over 1.6 million shares, Akre Capital Management was the company’s leading stakeholder in Q3.

8. McDonald’s Corporation (NYSE:MCD)

12-Month Dividend Growth Rate: 10.1%

An American multinational fast food company, McDonald’s Corporation (NYSE:MCD) ranks eighth on our list of best dividend growth stocks. In the past 12 months, the company has raised its payout by 10.1% and maintains a 46-year streak of dividend growth. It pays a quarterly dividend of $1.52 per share for a dividend yield of 2.32%, as of February 13.

In Q4 2022, McDonald’s Corporation (NYSE:MCD) reported revenue of nearly $6 billion, which beat analysts’ consensus by $180 million. The company’s full-year comparable sales grew by 10% and system-wide sales increased by 5%.

KeyBanc maintained an Overweight rating on McDonald’s Corporation (NYSE:MCD) in February with a $290 price target. The firm mentioned that the company’s top-line results for the recent quarter are solid.

At the end of Q3 2022, 53 hedge funds tracked by Insider Monkey owned stakes in McDonald’s Corporation (NYSE:MCD), compared with 50 in the previous quarter. The collective value of these stakes is $1.8 billion. With over 2 million shares, Bridgewater Associates was the company’s leading stakeholder in Q3.

7. NextEra Energy, Inc. (NYSE:NEE)

12-Month Dividend Growth Rate: 10.4%

NextEra Energy, Inc. (NYSE:NEE) is an American renewable energy company, headquartered in Florida. In January, Wells Fargo raised its price target on the stock to $110 with an Overweight rating on the shares. The firm highlighted the company’s Generation Outlook 2050 analysis.

NextEra Energy, Inc. (NYSE:NEE) currently pays a quarterly dividend of $0.425 per share and has a dividend yield of 2.27%, as of February 13. The company has been rewarding shareholders with consistent dividend growth for the past 26 years. Its 12-month dividend growth rate stands at 10.4%, which makes it one of the best dividend growth stocks on our list.

NextEra Energy, Inc. (NYSE:NEE) remained popular among elite funds in Q3 2022, as 73 funds in Insider Monkey’s database owned stakes in the company, up from 59 in the previous quarter. The collective value of these stakes is over $2.1 billion.

ClearBridge Investments mentioned NextEra Energy, Inc. (NYSE:NEE) in its Q3 2022 investor letter. Here is what the firm has to say:

“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”

6. Archer-Daniels-Midland Company (NYSE:ADM)

12-Month Dividend Growth Rate: 12.5%

Archer-Daniels-Midland Company (NYSE:ADM) is an Illinois-based multinational food processing company. The company is one of the best dividend growth stocks on our list as its 12-month dividend growth stands at 12.5%. Moreover, it has raised its payouts for 50 years in a row. The company currently pays a quarterly dividend of $0.45 per share and has a dividend yield of 2.19%, as of February 13.

AbbVie Inc. (NYSE:ABBV), The Coca-Cola Company (NYSE:KO), and Becton, Dickinson and Company (NYSE:BDX) are other dividend stocks that have shown solid dividend growth.

In January, Stifel raised its price target on Archer-Daniels-Midland Company (NYSE:ADM) to $113 with a Buy rating on the shares, highlighting the company’s overall performance in 2022.

As of the close of Q3 2022, 37 hedge funds tracked by Insider Monkey reported owning stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 42 in the previous quarter. These stakes are valued collectively at nearly $600 million.

Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm has to say:

“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”

Click to continue reading and see 5 Dividend Growth Stocks with the Highest Growth Rates.

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Published on May 1, 2024 at by Inan Dogan, PhD

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