Dividend growth stocks can be great long-term investments to put into any portfolio. If a company grows its dividend on a regular basis, that can help ensure that inflation doesn't diminish the value of the payout over time. And the longer you hang on, the higher your dividend income becomes.
Dividends increases are by no means a guarantee, and that's why it's important to focus on quality stocks. Three solid dividend stocks that you may want to consider loading up on today include Target (TGT 2.94%), T. Rowe Price Group (TROW -0.22%), and Chevron (CVX -0.13%). Not only do these stocks offer high yields in excess of 4%, but they have also grown their payouts over the years, have strong financials, and they look incredibly cheap right now.
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1. Target
Retail giant Target has been struggling with generating much growth this year as consumers cut back on discretionary spending amid economic challenges. But despite the headwinds, the company's financials aren't all that bad. For the period ended May 3, Target's net sales declined by just 3%, to $23.8 billion. And its net earnings actually improved by 10%, to more than $1 billion, as the company has been cutting costs.
Shares of Target have been under pressure this year as investors brace for continued struggles from the retailer. But while it may not be a great growth stock to own right now, Target remains a dependable option for dividend investors. It yields 4.5%, and the company raised its dividend by just under 2% this year, extending its streak of increases to 54 consecutive years.
At an incredibly low price-to-earnings multiple of only 11, Target can be a great value buy today. The business may not be experiencing strong growth, but with a low payout ratio of just 49%, it can make for a great dividend stock to buy and hold.
2. T. Rowe Price Group
Global investment firm T. Rowe Price is another solid dividend stock to add to your portfolio today. Year to date, it's down around 6%, but its overall performance has been steady.
During the first six months of the year, the company's net revenue totaled $3.5 billion, which was virtually unchanged from a year ago. Rising costs did, however, chip away at its bottom line, which was down 6%, with earnings totaling just under $1 billion over the past two quarters.
The stock yields 4.9%, and T. Rowe has increased its dividend for 39 consecutive years. In February, it announced it was increasing its dividend by more than 2%. Its payout ratio is modest at 56% of earnings, leaving plenty of room for the company to continue making more rate hikes for the foreseeable future.
Trading at less than 12 times earnings, this is another cheap dividend growth stock worth buying right now.
3. Chevron
Rounding out this list of high-yielding dividend growth stocks is oil and gas giant Chevron. It pays 4.5%, as it also provides investors with a terrific source of recurring cash flow. While there is volatility that comes with investing in this sector, Chevron is a leading player in it, making it one of the safer options for dividend investors to consider. Amid a myriad of economic cycles and challenges, it has remained a solid dividend growth stock -- Chevron has raised its payout for 38 straight years.
The company has experienced volatility this year due to falling oil prices. Over the past six months, its revenue totaled $92.4 billion, which was down 7% year over year. And its adjusted earnings fell by 32% to $6.9 billion. But its cash flow from operations totaled $13.8 billion, which was still considerably higher than how much it paid out in dividends -- $5.9 billion.
There will be fluctuations in earnings for Chevron, but with the company growing its exposure in the industry, including its recent acquisition of Hess, which has a strong portfolio of assets in Guyana, this is a continually growing business that investors can rely on for the long haul.
Chevron's stock trades at 18 times its estimated future earnings (based on analyst expectations). By comparison, the average stock on the S&P 500 (^GSPC 0.73%) trades at a forward earnings multiple of 24. For an industry leader, Chevron's valuation looks incredibly cheap.
