Dividend growth stocks have a long track record of outperforming most other asset classes. The key reason is that companies that regularly boost the size of their dividend checks tend to be high-quality businesses capable of delivering strong financial results in nearly any kind of economic environment.
In short, the dividend growth investing strategy is a proven way to build wealth over time. Armed with this insight, here are five blue chip dividend growth stocks that are near locks to make you richer over time.
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These high-quality dividend stocks are always worth buying
1. Walmart (WMT -0.08%) is the leading big box retailer in the U.S., with annual sales expected to surpass $666 billion in 2025 and a network of 4,622 stores across the country as of now. Walmart also has a strong presence in the global market and a high demand for its Walmart+ subscription service, making it a key competitor in the online retail space.
The company has been paying and increasing its dividend every year since 1974. In the last 10 years, Walmart has raised its dividend at a compound annual growth rate of 1.94%. The retail giant's current yield is 1.4%, which is decent for a large-cap company still in growth mode. Its dividend is also sustainable, evidenced by its low payout ratio of 37.7%.
Walmart may not offer impressive dividend growth or yield, but it does have a commendable track record of regular increases to its payout. The company's solid competitive advantage also provides shareholders with an all-important margin of safety.
2. Amgen (AMGN 0.22%) has been pushing the boundaries of biotech innovation since 1980. The company was among the first to successfully develop and market biologically based medicines, an industry that has grown into a $511 billion-plus market and continues to expand by double digits every year.
Amgen has boosted the size of its dividend checks every year since 2011, and its 10-year dividend growth rate stands at a blistering 13.9%. The biotech currently offers an above-average yield of 2.92%. Amgen's generous dividend also screens as safe, given its modest payout ratio of 59.2%, robust top-line growth prospects (estimated 15.8% growth in 2024), and management's commitment to rewarding loyal shareholders.
3. PepsiCo (PEP -0.62%) is a leading producer and distributor of beverages and snacks worldwide. The company owns many well-known brands, such as Pepsi, Frito-Lay, Doritos, Cheetos, and more. PepsiCo has a strong track record of dividend growth, with 51 years of consecutive increases and a 10-year dividend growth rate of 8.2%. The company offers a solid 2.98% annualized yield, but its payout ratio of 80.5% is somewhat elevated. However, PepsiCo is delivering mid-single-digit revenue growth currently, which should sustain its top-notch dividend policy.
4. Medtronic (MDT 0.62%) is the world's largest pure-play medical device company. It sports leading positions in several high-growth markets, such as cardiac care, diabetes management, neurostimulation, and minimally invasive surgery. Medtronic has also demonstrated its commitment to rewarding shareholders with a remarkable 46-year streak of dividend increases.
Over the last 10 years, the company has raised its dividend by an average of 9% annually. Moreover, Medtronic offers a solid 3.19% yield at current prices. The dividend is well supported by the company's mid-single-digit revenue growth outlook for fiscal year 2025 and management's dedication to the program despite its hefty 88.9% payout ratio.
5. Altria (MO -0.37%) is a leading tobacco company in the U.S. that enjoys a dominant market position. On the dividend side of the ledger, the tobacco giant offers a generous yield of almost 10%. The company has also increased its dividend 58 times in the last 54 years, demonstrating management's dedication to rewarding shareholders. However, Altria also has a high payout ratio of 77.5% at current levels.
Altria has grown its dividend payments by 6.5%, on average, per year over the previous decade. And even though the cigarette smoking rate in the U.S. is declining, Altria is expected to achieve low-single-digit revenue growth for the rest of the decade thanks to its strong pricing power and limited competition in the premium cigarette brand segment.
