Death and taxes are said to be the only two guarantees in life. But there's another that may not be talked about quite as much: bills. With each new day of life comes additional living expenses.
The good news is that by buying and holding the best dividend stocks in the world, investors should have solid help in keeping up with the rising cost of living that results from inflation. That's because world-class businesses tend to raise their dividends each year. Here are two stocks that have recently upped their payouts.
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1. UnitedHealth Group
With a market capitalization of $483 billion, UnitedHealth Group (UNH 0.23%) is the biggest health insurer in the world. For context, the next-largest health insurer, CVS Health, is approximately one-fourth the size with a market cap of $123 billion.
Technological advances and inflation are pushing up the cost of healthcare. As these costs continue to rise, more consumers will turn to health insurance as a hedge. This is why the market research firm Global Market Insights believes that the global health insurance market will grow 4.6% each year, from $2.8 trillion in 2020 to $3.9 trillion by 2027.
Thanks to UnitedHealth's unmatched scale and a positive industry outlook, analysts are predicting the company will produce 14.6% annual earnings growth over the next five years. This strong growth potential explains why UnitedHealth's board of directors was confident enough to announce a 13.8% increase in its quarterly dividend per share to $1.65 last month.
And UnitedHealth's dividend payout ratio sits at just about 30%. This provides the company with plenty of room to keep handing out similar payout hikes in the years to come. UnitedHealth's 1.3% dividend yield is moderately lower than the S&P 500 index's 1.6% yield. But the lower yield is compensated for by the stock's low-double-digit annual dividend growth prospects.
UnitedHealth isn't absurdly cheap. However, the stock's forward price-to-earnings (P/E) ratio of 20.9 is sensible for its low-teens-percentage annual earnings growth forecast over the medium term. This is what makes UnitedHealth an unstoppable stock to buy and forget.
2. Union Pacific
Union Pacific's (UNP -1.82%) 32,000-plus route miles in 23 states covering the western two-thirds of the United States make it one of the largest railroad operators in the world. And despite technological innovations over the company's 160-year operating history, railroads are as important as ever. Today 28% of U.S. freight is moved via railways.
The company's extensive presence in the U.S. makes it a bet that America will continue to grow economically over the long haul. And as Warren Buffett puts it, it's wise to never bet against this country. This is why analysts are anticipating that Union Pacific will deliver 15.9% annual earnings growth through the next five years.
Due to this robust earnings growth profile, it shouldn't be surprising that the company's board of directors recently authorized a 10.2% increase in the quarterly dividend to $1.30 per share. And with Union Pacific's dividend payout ratio at 44%, the company is just below its targeted payout ratio of 45%. This positions the company's dividend to chug along with low-double-digit annual growth in the years ahead, which is enticing when paired with a market-beating 2.5% dividend yield.
And at a forward P/E ratio of 16.3, Union Pacific is attractively valued for long-term investors to buy in now.
