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 3.51%) 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.
NASDAQ: WMT
Key Data Points
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 3.10%) 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.
NASDAQ: AMGN
Key Data Points
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 2.01%) 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 2.74%) 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 1.50%) 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.
