In this article, we discuss 5 best dividend growth stocks to buy now. You can skip our detailed analysis of dividend growth stocks and their returns in the past, and go directly to read 10 Best Dividend Growth Stocks to Buy Now.
5. The Home Depot, Inc. (NYSE:HD)
Years of Consistent Dividend Growth: 12
5-Year Compound Average Dividend Growth Rate: 16.4%
The Home Depot, Inc. (NYSE:HD) is a Georgia-based home improvement company that specializes in construction and other home appliances. In August, Truist raised its price target on the stock to $399 and maintained a Buy rating on the shares, appreciating the company’s solid Q2 results. The firm also highlighted the growth in its Home Improvement segment.
In Q2 2022, The Home Depot, Inc. (NYSE:HD) reported solid cash generation with its operating cash flow of nearly $3.4 billion. Its free cash flow for the quarter came in at $2.65 billion. At the end of July, the company had $1.2 billion in cash and cash equivalents, with $33 billion available in total current assets. In addition to this, the company’s net income came in at $9.4 billion, up from $8.9 billion during the same period last year.
The Home Depot, Inc. (NYSE:HD) currently pays a quarterly dividend of $1.90 per share, with a dividend yield of 2.81%, as of September 25. The company has raised its dividends for 12 years in a row and has a five-year dividend CAGR of 16.4%.
As per Insider Monkey’s database, 80 hedge funds tracked by Insider Monkey owned stakes in The Home Depot, Inc. (NYSE:HD), growing from 75 in the previous quarter. These stakes hold a collective value of over $5.3 billion, compared with $5.6 billion worth of stakes owned by hedge funds in the preceding quarter.
Diamond Hill Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter. Here is what the firm had to say:
“Home Depot shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.”
4. BlackRock, Inc. (NYSE:BLK)
Years of Consistent Dividend Growth: 13
5-Year Compound Average Dividend Growth Rate: 14.3%
BlackRock, Inc. (NYSE:BLK) is an American investment management company that specializes in risk management and fixed-income institutional services. Though the company missed analysts’ estimates on various accounts in the second quarter, the company’s cash flow remained strong. It generated over $1.64 billion in operating cash flow and its free cash flow came in at $1.52 billion. The company’s assets under management stood at $8.49 trillion, down from $9 trillion in the previous quarter.
On July 13, BlackRock, Inc. (NYSE:BLK) declared a quarterly dividend of $4.88 per share, in line with its previous dividend. The company holds a 13-year track record of consistent dividend growth. The companies’ shares yield at 3.39%, as recorded on September 25.
In August, Deutsche Bank raised its price target on BlackRock, Inc. (NYSE:BLK) to $860 with a Buy rating on the shares, highlighting the company’s recent quarterly earnings and its solid fundamentals.
Of the 895 elite funds tracked by Insider Monkey, 50 hedge funds owned stakes in BlackRock, Inc. (NYSE:BLK) in Q2 2022, up from 49 in the previous quarter. These stakes hold a collective value of over $1.56 billion. Harris Associates was the company’s leading stakeholder in Q2.
Carillon Tower Advisers mentioned BlackRock, Inc. (NYSE:BLK) in its Q1 2022 investor letter. Here is what the firm has to say:
“BlackRock (NYSE:BLK) shares underperformed due to a decline in equity market performance. As a reminder, market weakness typically drives assets under management lower, which in turn leads to lower revenues.”
3. Pool Corporation (NASDAQ:POOL)
Years of Consistent Dividend Growth: 11
5-Year Compound Average Dividend Growth Rate: 21.49%
Pool Corporation (NASDAQ:POOL) is an American manufacturing company that delivers products and services to swimming pools, irrigation, and outdoor industries. The company pays a quarterly dividend of $1.00 per share, with a dividend yield of 1.28%, as of September 25. The company has been raising its dividends consistently for the past 11 years.
In Q2 2022, Pool Corporation (NASDAQ:POOL) reported revenue of $2.1 billion, up 17.3% from the same period last year. Its operating income for the quarter stood at $419 million, growing 24% from the prior-year quarter. The company’s operating cash flow was $236.8 million and its free cash flow came in at $226 million. At the end of June 2022, it reported $91.4 million in cash and cash equivalents, compared with $58.4 million during the same period last year.
In July, Stifel reinstated its Buy rating on Pool Corporation (NASDAQ:POOL) with a $415 price target, following the company’s Q2 earnings. The firm expects company to maintain its performance in the upcoming quarters.
At the end of Q2 2022, 40 hedge funds tracked by Insider Monkey owned stakes in Pool Corporation (NASDAQ:POOL), compared with 42 in the previous quarter. These stakes hold a collective value of over $1.3 billion, up from $1.2 billion worth of stakes owned by hedge funds a quarter earlier.
Carillon Tower Advisers mentioned Pool Corporation (NASDAQ:POOL) in its Q1 2022 investor letter. Here is what the firm has to say:
“Pool (NASDAQ:POOL) is the world’s largest wholesale distributor of swimming pool supplies, equipment, and related leisure products. After an impressive run, the shares cooled off a bit as investors took some profits on stocks that were perceived to have benefitted from the pandemic. Despite this, the firm continues to see strong demand and remains well positioned to capitalize on a number of firmly established secular trends. Migration trends toward the Sunbelt as well as the desire consumers have shown to invest in their outdoor living and entertainment spaces have resulted in healthy fundamentals for the pool industry going forward.”
2. NextEra Energy, Inc. (NYSE:NEE)
Years of Consistent Dividend Growth: 26
5-Year Compound Average Dividend Growth Rate: 11.71%
NextEra Energy, Inc. (NYSE:NEE) is a Florida-based electric services company that provides clean and reliable electricity to approximately 6 million customers in Florida. In September, BMO Capital lifted its price target on the stock to $100 with an Outperform rating. The firm remained positive about the company’s industry-leading profile due to its strong fundamentals.
In Q2 2022, NextEra Energy, Inc. (NYSE:NEE) reported an operating cash flow of over $2.8 billion, up from $1.9 billion in the previous quarter. The company’s free cash flow stood at $606 million, compared with $338 million in the preceding quarter. Its revenue for the quarter was $5.1 billion, up 31.8% from the same period last year.
NextEra Energy, Inc. (NYSE:NEE) currently pays a quarterly dividend of $0.425 per share. This dividend growth stock has a dividend yield of 2.06%, as recorded on September 25. The company holds strong dividend history, raising its payouts consistently for the past 26 years. Its five-year dividend CAGR stands at 11.71%.
As of the close of Q2 2022, 59 hedge funds tracked by Insider Monkey owned stakes in NextEra Energy, Inc. (NYSE:NEE), compared with 64 in the previous quarter. These stakes hold a collective value of $2.76 billion. Fisher Asset Management owned the largest stake in the company in Q2, worth $1.25 billion.
ClearBridge Investments mentioned NextEra Energy, Inc. (NYSE:NEE) in its recently-published Q2 2022 investor letter. Here is what the firm has to say:
“We increased our exposure to the energy transition during the quarter with new positions in Iberdrola (OTCPK:IBDSF), a Spanish-based integrated utility that is also one of the leading renewable energy developers in the world, and NextEra Energy, Inc. (NYSE:NEE), an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. The war has opened the eyes of the world and energy independence is critical. Renewables are for many countries the only way to get to the target. It is expected that existing renewable project pipelines will be executed faster, and more projects added to existing pipelines.
The energy transition would be extremely helpful for climate change and Iberdrola ranks well on our ESG matrix. NextEra, meanwhile, recently raised future earnings forecasts, citing a very favorable macro environment for rapid renewable generation expansion driven by decarbonization of the U.S. economy and the relative attractiveness of renewable generation in the context of high natural gas and power prices.”
1. Target Corporation (NYSE:TGT)
Years of Consistent Dividend Growth: 51
5-Year Compound Average Dividend Growth Rate: 14.96%
An American big-box store company, Target Corporation (NYSE:TGT) has been making uninterrupted dividend payments since its IPO in 1967. The company maintains a 51-year streak of consistent dividend growth and has raised its payouts at a CAGR of 14.96% in the past five years. Its current quarterly dividend stood at $1.08 per share, with a dividend yield of 2.83%, as recorded on September 25.
In September, KeyBanc initiated its coverage of Target Corporation (NYSE:TGT) with an Overweight rating and a $200 price target, highlighting the company’s defensive growth, market share gains, and margin recovery to normal levels after the pandemic of 2020.
As per Insider Monkey’s Q2 2022 database, 46 hedge funds reported owning stakes in Target Corporation (NYSE:TGT), compared with 50 in the previous quarter. These stakes hold a combined value of over $1.2 billion.
LRT Capital Management mentioned Target Corporation (NYSE:TGT) in its Q2 2022 investor letter. Here is what the firm has to say:
“The Target Corporation (NYSE:TGT) operates retail stores that sell a variety of merchandise ranging from necessities such as food and hygiene products to discretionary products like children’s toys and electronics. The sale of this merchandise is done primarily through physical retail locations in all 50 US states. However, Target also sells its merchandise digitally through its online website which delivers merchandise to its customers in three ways: order pickup, drive up, and “Shipt”. The Target Corporation operates a single segment through 1,926 physical stores. (Click to view the full text)
You can also take a look at 10 High-Yield Monthly Dividend Stocks to Buy in September and 10 Dividend Aristocrats Under $60 You Can Buy in September
