In this article, we will take a look at some of the best dividend stocks to invest in.
Dividend growth stocks have earned a strong place in many income portfolios. Investors like them because they often hold up better when the market is under pressure, while still producing steady long-term returns.
T. Rowe Price pointed this out in its research on the Russell 1000 Index. Over the 35 years ended December 31, 2020, dividend growth stocks outperformed the broader Russell 1000 by an average of 5.88 percentage points during down markets. That downside protection matters. When markets fall, the stocks that can stay more stable help investors remain invested instead of reacting emotionally.
The long-term numbers also support the case. Over that same 35-year period, dividend growth stocks in the Russell 1000 delivered an annualized return of 11.4%, compared with 10.9% for the overall index. It’s not a dramatic gap at first glance, but over decades that extra return makes a real difference.
WisdomTree adds another useful angle. It argues that dividend growth is one of the key drivers behind long-term compounding. Looking at 50 years of data, it found that a strategy targeting the top 20% of stocks by profitability beat the bottom quintile by 409 basis points per year (11.55% vs. 7.46%). The takeaway is that profitability fuels dividend growth. When a business consistently generates strong earnings, it has more room to increase dividends year after year.
Given this, we will take a look at some of the best dividend growth stocks to invest in.
Our Methodology:
For this list, we screened for companies with a market cap above $2 billion and identified 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 14% 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. Essent Group Ltd. (NYSE:ESNT)
5-Year Average Dividend Growth Rate: 14.14%
Essent Group Ltd. (NYSE:ESNT) is among the best dividend stocks to invest in.
On January 9, JPMorgan analyst Richard Shane lifted the firm’s price target on Essent Group Ltd. (NYSE:ESNT) to $66 from $65 and kept a Neutral rating on the stock. The move came as JPMorgan updated ratings and price targets across the consumer finance group ahead of Q4 earnings. In his note, Shane pointed to fresh uncertainty tied to President Trump’s proposal that would require credit card issuers to cap interest rates at 10% for one year. He said the idea adds near-term volatility for the sector. JPMorgan warned that if such a cap were implemented, it “would fundamentally reshape the card industry,” cutting into issuer profitability and limiting credit access for consumers. Still, the firm described Trump’s post as a “high-severity, low-probability risk likely subject to significant legal challenges.” Given the backdrop, the analyst said a defensive stance in consumer finance still makes sense.
On the fundamentals side, Essent posted net income of $164 million in Q3 2025, with diluted EPS of $1.67. US mortgage insurance in force rose to $249 billion, up 2% from a year earlier, while persistency stayed solid at 86%.
Chairman and CEO Mark Casale highlighted the company’s strong capital position and said Essent had repurchased nearly 9 million shares for more than $500 million year-to-date through October 31. He also announced a new $500 million share repurchase authorization running through year-end 2027, along with a Q4 dividend of $0.31 per share.
Essent Group Ltd. (NYSE:ESNT) is a Bermuda-based holding company. Through its wholly owned subsidiaries, it provides private mortgage insurance and reinsurance, as well as title insurance and settlement services for mortgage lenders, borrowers, and investors.
14. Patrick Industries, Inc. (NASDAQ:PATK)
5-Year Average Dividend Growth Rate: 14.37%
On January 9, Truist analyst Gregory Miller raised the firm’s price target on Patrick Industries, Inc. (NASDAQ:PATK) to $126 from $114 and maintained a Buy rating on the stock. In his note, Miller said Patrick stood out in 2025, beating the broader recreation group as investors responded positively to how well the company held up despite a tougher macro backdrop.
Truist also pointed to a few areas that could support growth going forward. One is the company’s aftermarket business through RecPro, which has been gaining traction. Another is Patrick’s expanding presence in powersports, which now accounts for roughly 9%–10% of total revenue, giving the company a bigger foothold in a market with long-term potential.
In Q3 2025, Patrick reported net sales of $976 million, up 6% year-over-year. The increase was driven by steady organic growth and contributions from acquisitions, though industry-wide shipment declines continued to weigh on results. Management said revenue improved across all four of its main end markets, helped by stronger content per unit and the added boost from acquisitions.
Profitability was a bit softer compared to last year. Operating income came in at $66 million versus $74 million in the prior-year quarter, and operating margin eased to 6.8% from 8.1%. Net income was $35 million, down from $41 million a year earlier.
On the cash flow side, operating cash flow totaled $199 million year-to-date, compared with $224 million in the same period last year. Over the trailing twelve months, free cash flow was $211 million. The company also returned $13 million to shareholders through its regular quarterly dividend.
Patrick Industries, Inc. (NASDAQ:PATK) supplies component solutions to manufacturers across the RV, marine, powersports, and housing markets.
