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5 Best Dividend Growth Stocks With High Upside Potential: Part 2

Given that being able to consistently raise one’s dividend through good times and bad is one of the prime indicators of having a wide moat, Insider Monkey has put together a list of the smart money’s favorite dividend growth stocks.

In the first article of the series, we analyzed five stocks that the smart money likes which yield over 2% and have raised their payout for 25 consecutive years or more. In this second article, we’ll cover the smart money’s favorite dividend growth stocks in Procter & Gamble Co (NYSE:PG), Exxon Mobil Corporation (NYSE:XOM), McDonald’s Corporation (NYSE:MCD), The Coca-Cola Co (NYSE:KO), and Chevron Corporation (NYSE:CVX).

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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#5 Chevron Corporation (NYSE:CVX)

– Number of Hedge Fund Holders (as of September 30): 53
– Total Value of Hedge Fund Holdings (as of September 30): $2.24 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 1.00%

Although crude prices have been volatile over the past decade, Chevron Corporation (NYSE:CVX)’s payout has not. Due to the company’s strong balance sheet and integrated nature, Chevron has raised its dividend for 30-straight years. On account of the raises, Chevron shares currently yield 3.89%, a number attractive for any dividend investor. Investors have noticed Chevron’s dividend as shares of the company have rallied by 28% year-to-date (as many investors perceive Chevron’s dividend to be safer due to Brent’s rise). If OPEC can get its act together and Iraq and Iran play ball, there is the potential for more long-term upside ahead.

Follow Chevron Corp (NYSE:CVX)
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#4 The Coca-Cola Co (NYSE:KO)

– Number of Hedge Fund Holders (as of September 30): 53
– Total Value of Hedge Fund Holdings (as of September 30): $19.57 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 10.80%

Although more and more cities around the world are considering levying soft drink taxes, history is on The Coca-Cola Co (NYSE:KO)’s side. Not only has Coca-Cola raised its dividend for 53-consecutive years, but history has shown that ‘sin’ stocks with wide moats such as Philip Morris can still be very dependable dividend payers. Given that Coca-Cola has also diversified away from soft drinks, the company’s 3.37% yield is safer. Warren Buffett‘s Berkshire Hathaway owned 400 million Coca-Cola shares at the end of September.

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We’ll check out three more high growth-potential dividend stock picks on the next page.

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