Best S&P 500 stocks for dividend growth

Investing in companies that pay dividends to shareholders is a popular way for investors to generate income, while maintaining the growth potential that comes with holding stocks. Companies that grow their dividends over time can be particularly rewarding for investors.

Here’s what you need to know about dividend investing and some of the best stocks for dividend growth.

Dividend-investing strategies

Dividend investing typically is centered around companies with high-dividend yields or companies that are expected to grow their dividends over time. Both can be successful, so investors will have to decide whether they want more in current income that’s offered by high-dividend stocks, or if they want the growth from companies that may have lower current yields.

Companies with high-dividend yields may be experiencing some current difficulties and there may even be doubts about whether they can maintain their high dividend payments. They may also be more mature companies that pay out a large portion of their earnings to shareholders in the form of dividends.

On the other hand, companies expected to grow their dividends may be transitioning from a high growth stage to slower growth and are increasing their payouts to shareholders. They may still be growing earnings at a substantial pace, which can also boost the share price over time, giving investors an added boost to their dividend income.

Best S&P 500 stocks for dividend growth

*Note: Data as of October 23, 2023. Dividend growth data from Charles Schwab. 

1. FedEx Corp. (FDX)

FedEx offers air transportation and ground delivery services and generated more than $90 billion in revenue in its 2023 fiscal year. Its FedEx Express business offers time-definite delivery to more than 220 countries and territories in markets that make up more than 99 percent of the world’s GDP.

• 10-year dividend growth: 23.7 percent
• Annual dividend: $4.82
• Dividend yield: 2.03 percent

2. UnitedHealth Group (UNH)

UnitedHealth Group is a healthcare company that is involved in a number of different aspects of healthcare including managed care, pharmacy benefits, urgent care centers, surgical centers and more. The company generated about $324 billion in 2022 revenues.

• 10-year dividend growth: 23.1 percent
• Annual dividend: $7.06
• Dividend yield: 1.35 percent

3. Amphenol Corp. (APH)

Amphenol is among the world’s largest designers and manufacturers of electrical, electronic and fiber optic connectors, antennas, sensors and coaxial and specialty cables. The company sells into a variety of different markets including automotive, aerospace, broadband communications and military. Amphenol generated more than $12 billion in sales in 2022.

• 10-year dividend growth: 22.7 percent
• Annual dividend: $0.84
• Dividend yield: 1.06 percent

4. Cintas Corp. (CTAS)

Cintas serves more than 1 million businesses by providing a wide range of products and services including uniforms, mats, mops, restroom supplies, first aid and safety equipment. The company generated $8.8 billion in revenue in its 2023 fiscal year.

• 10-year dividend growth: 21.3 percent
• Annual dividend: $5.40
• Dividend yield: 1.08 percent

5. Visa Inc. (V)

Visa is a digital payments company that facilitates payments between consumers and businesses around the world. Visa’s brand saw 258 billion transactions in fiscal 2022, an average of 707 million per day. Visa generated more than $29 billion in revenue in fiscal 2022.

• 10-year dividend growth: 21.2 percent
• Annual dividend: $1.80
• Dividend yield: 0.77 percent

6. Home Depot Inc. (HD)

Home Depot is the largest home improvement retailer in the world and offers many different products including building materials, lawn and garden products, and other home improvement items. The company also offers services such as equipment rental and home improvement installation. Home Depot generated more than $157 billion in sales in fiscal 2022.

• 10-year dividend growth: 20.7 percent
• Annual dividend: $8.36
• Dividend yield: 2.93 percent

7. Texas Instruments Inc. (TXN)

Texas Instruments may be best known for its calculators, but that business is a relatively small portion of its overall operations today, which mostly involves designing and manufacturing semiconductors. Texas Instruments generated more than $20 billion in sales in 2022.

• 10-year dividend growth: 20.6 percent
• Annual dividend: $5.20
• Dividend yield: 3.55 percent

8. A. O. Smith Corp. (AOS)

A. O. Smith makes and sells residential and commercial gas and electric water heaters, boilers, heat pumps, tanks and water treatment products. North America accounted for about 74 percent of their approximately $3.8 billion in 2022 sales.

• 10-year dividend growth: 20.3 percent
• Annual dividend: $1.28
• Dividend yield: 1.93 percent

9. American Tower Corp. (AMT)

American Tower is a real estate investment trust (REIT) that owns multitenant communications sites. It leases those sites to wireless service providers, radio and television broadcasters, wireless data providers, government agencies and municipalities. The company generated $10.7 billion in revenue in 2022.

• 10-year dividend growth: 20.3 percent
• Annual dividend: $6.48
• Dividend yield: 4.07 percent

10. Lowe’s Companies (LOW)

Lowe’s is the second largest home improvement retailer in the world and operated more than 1,700 stores in the U.S. as of February 2023. Lowe’s was founded in 1921 with a single hardware store in North Carolina. The company generated more than $97 billion in sales in its fiscal year 2022.

• 10-year dividend growth: 20.0 percent
• Annual dividend: $4.40
• Dividend yield: 2.34 percent

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.