8 Dividend Growth Stocks Every Investor Should Consider

Key Points

• From healthcare monopolies to industrial automation leaders, these companies dominate their markets with recession-resistant cash flows.

• Five-year dividend growth rates go from low single digits to high double digits, with options for income seekers and growth-focused investors.

• 10 stocks we like better than Parker-Hannifin ›

Forget the dividend darlings everyone already owns -- the real money in income investing comes from companies raising their payouts faster than inflation while keeping enough cash to reinvest in growth.

Wall Street obsesses over yield chasers buying 8% dividends from dying businesses, but the smartest investors know that a 2% yield growing at 15% annually beats a static high yield every single time.

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These eight dividend growth machines have raised their payouts for an average of almost 51 consecutive years, yet most trade at reasonable valuations because they lack flashy yields or a clear tie-in to the artificial intelligence (AI) theme. Read on to find out more about these top passive income plays.

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The automation compounder

Parker-Hannifin (NYSE: PH) doesn't make headlines, but its 14.3% five-year dividend growth rate crushes the dividend programs of most tech stocks, despite yielding just 0.97%. The industrial automation leader's microscopic 24.6% payout ratio leaves huge room for future increases, even after 69 consecutive years of dividend growth -- making it one of only five companies with such a streak.

The pricing-power fortress

Procter & Gamble (NYSE: PG) turned household products into an inflation hedge, yielding 2.64% with a balanced 62% payout ratio. Its 6% five-year dividend growth might seem pedestrian, but 69 consecutive years of increases spanning every recession since 1957 prove the model's durability.

The global hydration monopoly

Coca-Cola (NYSE: KO) transformed sugar water into a 3.03% yielding cash machine with 63 consecutive years of dividend increases. Its 4.3% five-year growth rate and 70.5% payout ratio reflect mature market realities, but emerging market expansion and premium products like Topo Chico sparkling mineral water drive incremental growth. Best of all, the company's strong moat ensures stable free cash flow and dependable income for shareholders.

The triple-threat healthcare giant

Johnson & Johnson (NYSE: JNJ) generates reliable cash flow from pharmaceuticals and medical devices, supporting a 2.93% dividend yield with a 53.4% payout ratio. Dividend growth has averaged 5.3% annually over the past five years, while the company continues to invest billions in drug development. With 63 straight years of increases, J&J's disciplined execution and diversified operations make it one of the most dependable income stocks in healthcare.

The vice-stock value play

Altria Group (NYSE: MO) stock yields 6.5% with a payout ratio of 78.9%, a high but stable level sustained by its pricing power. The company has lifted its dividend at a 4.04% five-year rate even as cigarette volumes decline about 5% annually. That math demands precision -- pushing prices high enough to preserve cash flow without raising customer defection.

The home-improvement growth engine

Lowe's Companies (NYSE: LOW) has raised its dividend by 16.9% over the past five years, offering a modest 1.79% yield that favors growth over income. With a conservative 38.1% payout ratio and 25 straight years of increases, Lowe's has shown it can compound shareholder returns through both housing busts and booms -- and still has plenty of room to keep climbing as housing turnover rebounds.

The powerhouse in maintenance, repair, and operations supplies

W.W. Grainger (NYSE: GWW) yields 0.91% with a lean 21.3% payout ratio, fueling 8.06% annual dividend growth alongside steady e-commerce investment. Its business may look dull on the surface, but factories, hospitals, and office buildings depend on Grainger's supplies every day. That essential role has powered 54 straight years of dividend increases -- proof that boring can be brilliant.

The medical device innovator

Abbott Laboratories (NYSE: ABT) has boosted its dividend 10.6% annually over the past five years, exceptional growth in the healthcare space. A modest 1.76% yield and 28.6% payout ratio leave ample room for expansion, while its FreeStyle Libre system dominates continuous glucose monitoring outside the U.S. That recurring revenue stream has helped fuel 53 consecutive years of dividend increases.

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George Budwell has positions in Abbott Laboratories. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Johnson & Johnson and Lowe's Companies. The Motley Fool has a disclosure policy.