The maker of these cartridge filters tops our list of dividend stocks. Image source: Sun Hydraulics

Dividend stocks appeal to investors who want both regular income from their portfolios and steady growth in share prices. Growth and income make a winning combination that in the best dividend stocks leads to life-changing, long-term gains.

The problem, though, is finding the best dividend stocks before they soar higher. Turning to history to see how yesterday's top dividend stocks got to where they are today can show you some hints about what characteristics to look for when you're shopping for tomorrow's dividend winners. In particular, looking at the best-performing dividend stocks of the past 10 years will show you some common themes that you can use to help build a successful dividend portfolio for the future.

The best dividend stocks
In order to find the best of the best, I looked for stocks in the Russell 3000 Index that have a current dividend yield of at least 2% and have raised their payouts by at least 10% annually over the past 10 years. Then, to incorporate the need for growth, I took the qualifying stocks and ranked them by their total return since a decade ago.

Without further ado, here are the market's 10 best dividend stocks of the past 10 years:


Return, Past 10 Years

Dividend Yield

10-Year Average Annual Dividend Growth

Sun Hydraulics (NASDAQ:HLIO)




Cummins (NYSE:CMI)




Cal-Maine Foods (NASDAQ:CALM)




The Buckle (NYSE:BKE)




Omega Healthcare Investors (NYSE:OHI)




HollyFrontier (NYSE:HFC)




Reynolds American (NYSE:RAI)




Sinclair Broadcast Group (NASDAQ:SBGI)




BlackRock (NYSE:BLK)




Compass Minerals (NYSE:CMP)




* Includes special dividends. Source: S&P Capital IQ

The first thing that stands out about all of these companies is that they couldn't be more varied in terms of sectors. Typically, when you look at lists of top-returning stocks, you'll find common themes in hot industries for that time period. But here you find industrial companies, retailers and consumer-goods specialists, a refiner, a financial giant, a healthcare-focused REIT, and a media company -- a veritable hodgepodge of dividend stocks from across the market.

Eggs pay big dividends for Cal-Maine investors. Source: Cal-Maine Foods

Yet many of these stocks do have something in common. If you had looked at them 10 years ago, they would have barely looked like dividend stocks at all. In 2005, Sun Hydraulics had just boosted its dividend by about 50%, sending the company's yield above the 0.5% mark. Cummins had a yield well below 2%, and Cal-Maine barely topped the half-percent mark in yield.

Admittedly, some of these companies have always been dividend-oriented in nature. As a REIT, Omega Healthcare is required to pay out most of its income in dividends, and the company has profited from the demographic trends favoring healthcare real-estate as well as the favorable interest rate trends that have made its stream of income even more valuable. Similarly, investors have always seen tobacco company Reynolds American more as a stable income play than as a high-growth investment, and a big portion of the stock's total return has come from its generous dividend yield. Yet as you can see, those stocks have actually produced the least dividend growth -- and in some cases, their yields have actually come down since 2005 as share-price growth outpaced rising dividend payouts.

Reynolds American products have produced impressive income for shareholders. Source: Reynolds American

Lessons to learn
From this list, dividend investors can learn a lot about finding great stocks. First, you can't assume that any one industry will produce dividend winners. Many income investors focus on particular sectors like utilities or telecom stocks, yet neither of those industries is represented on this list. Broadening your horizons can open your eyes to better long-term opportunities.

Also, assuming that today's top-yielding dividend stocks will continue to provide the best total returns will cause you to miss out on some of the best dividend-growth stocks of the future. Sure, it's worth taking a look at industries that are well-known for high-dividend companies. But you should also look for growing companies that are approaching the time in their life cycles in which they start investing less capital internally and instead look to reward their shareholders with dividends.

The best dividend stocks might look obvious in hindsight, but they don't always stand out early in their history. Regardless of the industry a company is in or its current yield, you need to focus on the company's future prospects in order to identify the great dividend stocks of tomorrow. Do that, and you'll boost your chances of finding the candidates that will show up on this list in 2025.