In this article, we will take a look at some of the most reliable dividend stocks.
Companies that consistently raise their dividends are often viewed as financially stable, with solid and sometimes improving competitive positions. Dividend growth stocks also tend to show lower volatility than the broader market, making them a popular choice among investors. As a result, funds centered on “dividend growth” have attracted billions of dollars in capital.
A report from ProShares highlighted that the S&P 500 Dividend Aristocrats Index, which tracks firms with at least 25 straight years of dividend increases, has returned 10.68% annually from its inception in 2005 through December 2023. Over the same period, the S&P 500 delivered a slightly lower return of 10.05%. The Dividend Aristocrats Index also experienced less volatility, averaging 15.30%, compared to 16.24% for the broader benchmark.
The report further pointed out that companies offering high dividend yields often face greater risks during downturns. Many such firms were forced to cut payouts during the 2008 financial crisis, largely due to their higher payout ratios and limited flexibility when cash flows declined. In contrast, dividend growth stocks have shown greater resilience. By steadily raising their dividends over time, they have achieved higher yields on cost than high-yield companies, despite starting with lower initial yields.
Given this, we will take a look at some of the best dividend growth stocks.
Our Methodology
For this article, we used a stock screener to identify dividend stocks that have maintained consistent dividend payouts over time. From that list, we chose companies that have increased their dividends by an average of more than 11% annually over the last 5 years. 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
15. Levi Strauss & Co. (NYSE:LEVI)
5-Year Dividend Growth: 11.32%
Levi Strauss & Co. (NYSE:LEVI) stands among the world’s largest branded apparel companies and is a global leader in denim wear. The company designs and markets jeans, casual clothing, and accessories for men, women, and children under its various brands.
On October 14, BTIG began coverage of Levi Strauss & Co. (NYSE:LEVI) with a Buy rating and a price target of $27.00. In its optimistic outlook, the firm pointed to the enduring strength of the Levi’s brand, stating that “the Levi’s brand has never been stronger.” This confidence is backed by the company’s strong performance, including gross profit margins of 61.38% and revenue growth of 11.22% over the past twelve months.
BTIG also highlighted its trust in the management team’s ability to effectively carry out its corporate strategy, positioning the denim maker for sustained growth. The firm forecasted earnings per share of $1.32 for fiscal year 2025, with an expected rise to $1.48 in fiscal year 2026.
Levi Strauss & Co. (NYSE:LEVI)’s shareholder return also remained strong during the quarter, as it distributed $151 million to investors, up 118% from the same period last year. Dividends for the quarter amounted to $55 million, which makes it one of the best dividend stocks to invest in. The company initiated its dividend policy in 2019 and has raised its payouts every year since then. Currently, it offers a quarterly dividend of $0.14 per share and has a dividend yield of 2.77%, as of October 30.
14. Essent Group Ltd. (NYSE:ESNT)
5-Year Dividend Growth: 13.94%
Essent Group Ltd. (NYSE:ESNT) plays a vital role in the US housing finance system by offering private mortgage insurance that protects lenders against potential losses on low-down payment loans. Although mortgage insurance remains its core business, the company has been steadily expanding into title insurance, which covers issues related to property ownership transfers.
On October 7, Keefe Bruyette analyst Bose George increased the firm’s price target for Essent Group Ltd. (NYSE:ESNT) from $67 to $71 while maintaining a Market Perform rating on the stock.
Essent Group Ltd. (NYSE:ESNT) main focus is on maintaining strong partnerships with leading mortgage lenders, staying aligned with GSE regulations, and effectively managing credit risk through reinsurance and disciplined capital allocation. The company’s broader strategy centers on preserving credit quality, enhancing capital efficiency, and delivering solid returns to shareholders.
Essent Group Ltd. (NYSE:ESNT) has been growing its dividends for five consecutive years, and during this period, it has raised its payouts at an annual average rate of nearly 14%. Its quarterly dividend comes in at $0.31 per share and has a dividend yield of 2.04%, as of October 30.
13. Patrick Industries, Inc. (NASDAQ:PATK)
5-Year Dividend Growth: 19.14%
Patrick Industries, Inc. (NASDAQ:PATK) produces and supplies components for several industries, including recreational vehicles (RVs), marine, powersports, and manufactured housing. Its key customers are original equipment manufacturers that build motorboats, boats, and prefabricated homes.
On October 15, Truist analyst Michael Swartz raised the price target for Patrick Industries, Inc. (NASDAQ:PATK) from $105 to $114 while maintaining a Buy rating on the stock. The update came as part of a broader research note in which the firm revised its model estimates and provided a preview of third-quarter earnings for the Recreational Vehicles sector.
In addition to its advancements in its industry, Patrick Industries, Inc. (NASDAQ:PATK) is also popular among income investors because of its strong dividend history. In FY24, the company returned $55 million to shareholders through dividends and share repurchases. It initiated paying dividends in 2019 and has raised its quarterly payouts from $0.25 per share to $0.40 per share during this period. The stock has a dividend yield of 1.59%, as of October 30.
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