Dividend growth stocks are a popular choice for long-term investors because they provide regular income and have the potential for capital appreciation as dividends increase over time. Keeping an eye on companies like The Home Depot, Inc. (HD), AbbVie Inc. (ABBV), and McDonald’s Corporation (MCD) could be a smart move for long-term growth.
Dividend growth rate is the annual rate at which a stock’s dividend increases over time. These stocks usually come from well-established companies with stable earnings, predictable cash flows, and a strong commitment to rewarding shareholders. Companies that consistently increase their dividends have historically shown more stability and less volatility than those that do not.
Investing in dividend growth stocks can offer a dual advantage for investors – they provide income from dividends while also offering the potential for share price appreciation. This combination can help reduce volatility and contribute to overall returns over time.
In the third quarter of 2024, S&P 500 dividend payments set a new record, increasing to $18.68 per share. Investing in companies with sustainable dividend growth can help enhance total returns and reduce volatility while providing a growing income stream.
Now, let’s take a closer look at the fundamentals of the top dividend growth stocks: HD, ABBV, and MCD.
The Home Depot, Inc. (HD) is a home improvement retailer that recently completed an acquisition of SRS Distribution, Inc. This move is expected to accelerate HD’s growth and establish it as a leading specialty trade distributor. HD’s net sales for the second quarter of 2024 increased year-over-year, and the company’s financial outlook remains positive.
AbbVie Inc. (ABBV) is a biopharmaceutical company that recently acquired Aliada Technologies to strengthen its position in the market. ABBV’s financial performance has been strong, and the company has raised its adjusted EPS forecast for the full year 2024. ABBV’s stock has performed well over the past year and has a strong overall rating.
McDonald’s Corporation (MCD) operates and franchises restaurants globally. MCD recently declared its 48th consecutive quarterly dividend, demonstrating its commitment to shareholders. The company’s revenue for the third quarter of 2024 increased year-over-year, and analysts expect further growth in the coming quarters.
Overall, these three dividend growth stocks offer long-term investors the potential for both income and capital appreciation. By investing in companies with a history of increasing dividends and strong financial performance, investors can build a resilient and profitable portfolio for the future.