10 Best Dividend Growth Stocks for 2026 (High CAGR + Sustainable Payouts)

Forget High Yield — Dividend GROWTH Is How You Build Real Wealth

Here's a secret most income investors learn too late: a stock yielding 1% that grows its dividend 15% per year will pay you MORE than a 5% yielder that never raises — and it'll happen faster than you think.

Dividend growth investing is the poor man's wealth-building strategy. You buy companies that raise their payouts every single year like clockwork. Small raises at first, sure. But compound that for a decade or two? Your yield on cost becomes absurd.

I found the 10 best dividend growth stocks for 2026 — companies with monster 5-year dividend CAGRs AND sustainable payout ratios. These aren't yield traps. They're money-printing machines that get better every year.

Ready to start building a dividend growth portfolio? Moomoo gives you free stocks on signup, and Webull offers commission-free trading on all of these.

The Dividend Growth Comparison Table (Sorted by 5-Year CAGR)

| Stock | Current Yield | 5-Yr Div CAGR | Payout Ratio | P/E | Growth Years | Price | |-------|--------------|----------------|--------------|-----|--------------|-------| | V (Visa) | 0.84% | 13.51% | 23.67% | 30.04 | 18 | $319.80 | | AVGO (Broadcom) | 0.78% | 11.52% | 47.16% | N/A | 16 | $332.77 | | MSFT (Microsoft) | 0.90% | 10.13% | 21.78% | 25.70 | 20 | $410.68 | | UNH (UnitedHealth) | 3.06% | 14.20% | ~45% | 21.83 | 16 | $288.77 | | ABBV (AbbVie) | 2.98% | 5.64% | 285.59%* | N/A | 54 | $232.35 | | LOW (Lowe's) | 1.88% | 18.20% | 40.08% | N/A | 54 | $254.71 | | HD (Home Depot) | 2.58% | 10.40% | 64.86% | N/A | 16 | $361.68 | | COST (Costco) | 0.53% | 12.80% | N/A | 51.09 | 20 | $982.57 | | AAPL (Apple) | 0.40% | 5.70% | 13.19% | 33.01 | 14 | $260.29 | | TGT (Target) | 3.80% | 10.50% | 55.84% | N/A | 55 | $120.36 |

ABBV's payout ratio is inflated by one-time charges; adjusted cash payout is ~45%.

Data as of March 5, 2026. Dividend growth rates are approximate 5-year compound annual growth rates.

Deep Dive: The 10 Best Dividend Growth Stocks

1. Lowe's (LOW) — The Dividend Growth Machine

Lowe's doesn't get the attention Home Depot does, but its dividend growth track record is absurd. A 5-year CAGR above 18% means Lowe's has roughly been doubling its dividend every 4 years.

Yield: 1.88% | 5-Yr CAGR: ~18.2% | Payout Ratio: 40.08%
Growth Streak: 54 consecutive years of increases (Dividend King)
Why it's here: With a 40% payout ratio, there's massive room to keep raising

That 1.88% yield looks puny today. But if you bought Lowe's 10 years ago, your yield on cost would be over 7%. That's the magic of dividend growth. Calculate your own yield-on-cost projections with our dividend calculator.

2. UnitedHealth Group (UNH) — Healthcare Cash Cow

UNH is a dividend growth monster hiding in plain sight. The largest health insurer in America throws off so much cash that 14%+ annual dividend raises barely dent the balance sheet.

Yield: 3.06% | 5-Yr CAGR: ~14.2% | Payout Ratio: ~45%
Growth Streak: 16 consecutive years of increases
Why it's here: Healthcare spending only goes up. UNH rides that wave while returning billions to shareholders

At $288.77, UNH has pulled back significantly from its 52-week high of $606.36, creating a rare opportunity. The current 3.06% yield is well above its historical average. Check our intrinsic value calculator to see if UNH is undervalued.

3. Visa (V) — The Toll Booth of Global Commerce

Every time someone swipes a card — anywhere on Earth — Visa takes a tiny cut. That's the most beautiful business model in capitalism, and it translates into 13.5% annual dividend growth.

Yield: 0.84% | 5-Yr CAGR: ~13.5% | Payout Ratio: 23.67%
Growth Streak: 18 consecutive years of increases
Why it's here: 23% payout ratio means Visa could TRIPLE its dividend tomorrow and still have room

Visa's yield is low today, but at 13.5% growth, it doubles roughly every 5.3 years. Buy at $319.80 today, and in 15 years you're looking at a yield on cost above 5% — while the share price has likely tripled. Run the numbers in our DRIP calculator.

4. Costco (COST) — The Membership Moat

Costco's regular dividend is small, but the growth rate is massive. Plus, they surprise shareholders with special dividends every few years ($15/share in 2024).

Yield: 0.53% | 5-Yr CAGR: ~12.8% | Payout Ratio: Low
Growth Streak: 20 consecutive years of increases
Why it's here: 95%+ membership renewal rate = recurring revenue machine

The P/E of 51 looks expensive until you realize Costco has earned that premium. They've never had a bad year. The membership model creates a revenue floor no competitor can replicate.

5. Broadcom (AVGO) — The AI Dividend Play

Broadcom is the rare tech company that ALSO pays a serious, fast-growing dividend. With semiconductor and infrastructure software exposure, AVGO rides the AI wave while rewarding shareholders.

Yield: 0.78% | 5-Yr CAGR: ~11.5% | Payout Ratio: 47.16%
Growth Streak: 16 consecutive years of increases
Why it's here: AI infrastructure demand + 11.5% dividend growth = the best of both worlds

AVGO just raised its quarterly dividend from $0.59 to $0.65 — a 10.2% increase in a single quarter. That's the kind of confidence that only comes from dominant market position.

6. Home Depot (HD) — America's Home Improvement King

Home Depot owns the home improvement market with nearly 40% market share. People always need to fix their homes, and HD always raises its dividend.

Yield: 2.58% | 5-Yr CAGR: ~10.4% | Payout Ratio: 64.86%
Growth Streak: 16 consecutive years of increases
Why it's here: Higher current yield than most growth names + double-digit growth rate

The 64.86% payout ratio is the highest on our list, but HD generates enough free cash flow to support it comfortably. At 2.58% yield with 10%+ growth, you're starting with meaningful income that accelerates fast. Analyze HD's fundamentals with our Graham calculator.

7. Microsoft (MSFT) — The Quiet Dividend Grower

Everyone knows MSFT for cloud and AI. Fewer people realize Microsoft has raised its dividend every year for 20 consecutive years at a 10%+ CAGR.

Yield: 0.90% | 5-Yr CAGR: ~10.1% | Payout Ratio: 21.78%
Growth Streak: 20 consecutive years of increases
Why it's here: 21.78% payout ratio is absurdly low — MSFT can raise dividends for decades

Microsoft's $305B in trailing revenue and $119B in net income make the $3.64 annual dividend look like loose change. At a 21.78% payout ratio, MSFT could raise its dividend 5x and still have room. That's the definition of sustainable growth.

8. Target (TGT) — The Comeback Dividend King

55 consecutive years of dividend increases. Target is a Dividend King — elite company that has raised payouts for 50+ years straight.

Yield: 3.80% | 5-Yr CAGR: ~10.5% | Payout Ratio: 55.84%
Growth Streak: 55 consecutive years of increases
Why it's here: Rare combination of high current yield + double-digit growth + 55-year streak

At $120.36, TGT is trading near its 52-week low, which has pushed the yield up to 3.80%. For dividend growth investors, this is the sweet spot — buy when the yield is high, lock in that elevated starting point, and let the 10%+ annual raises compound from there.

9. AbbVie (ABBV) — Pharma's Dividend Powerhouse

AbbVie's headline payout ratio looks scary at 285%, but that's distorted by one-time charges. On an adjusted cash flow basis, ABBV pays out about 45% of its earnings — perfectly sustainable.

Yield: 2.98% | 5-Yr CAGR: ~5.6% | Payout Ratio: ~45% (adjusted)
Growth Streak: 54 consecutive years of increases (including Abbott Labs legacy)
Why it's here: Nearly 3% yield + 54-year growth streak + blockbuster drug pipeline

ABBV's Humira patent cliff is mostly priced in. The pipeline (Skyrizi, Rinvoq) is already replacing lost revenue. At $232.35, you're getting a Dividend King at a reasonable price. Use our stock analysis tools to dig deeper.

10. Apple (AAPL) — The Cash King

Apple sits on more cash than most countries' GDP. The dividend growth rate of ~5.7% isn't the fastest, but the 13.19% payout ratio tells you everything: Apple is barely trying.

Yield: 0.40% | 5-Yr CAGR: ~5.7% | Payout Ratio: 13.19%
Growth Streak: 14 consecutive years of increases
Why it's here: World's most valuable company, 13% payout ratio, $3.82 trillion market cap

Apple's dividend growth is moderate, but the buyback program is aggressive (2.50% buyback yield). Combined with dividend growth, Apple's total shareholder yield is nearly 3%. The stock does the heavy lifting through price appreciation.

The Power of 10% Annual Dividend Growth (The Math That Changes Everything)

Let's say you buy a stock today yielding 2% with a 10% annual dividend growth rate. Here's what happens:

| Year | Yield on Cost | Annual Income (per $10,000) | |------|--------------|----------------------------| | 0 | 2.00% | $200 | | 5 | 3.22% | $322 | | 10 | 5.19% | $519 | | 15 | 8.35% | $835 | | 20 | 13.46% | $1,346 | | 25 | 21.67% | $2,167 |

After 20 years, your yield on cost is 13.46%. You're earning $1,346/year on a $10,000 investment. And the stock price has likely grown 5-10x as well.

Now compare that to a "high yield" stock paying 6% that never grows:

| Year | Yield on Cost | Annual Income (per $10,000) | |------|--------------|----------------------------| | 0 | 6.00% | $600 | | 5 | 6.00% | $600 | | 10 | 6.00% | $600 | | 15 | 6.00% | $600 | | 20 | 6.00% | $600 |

The 2% grower surpasses the 6% flat payer somewhere around year 12 — and then it absolutely smokes it from there. That crossover point is why dividend growth investing is the superior long-term strategy.

Model this yourself with our DRIP calculator.

Dividend Growth vs. High Yield: Which Builds More Wealth Over 20 Years?

Let's settle this with real math. $50,000 invested, dividends reinvested, over 20 years:

Scenario A: Dividend Growth Portfolio

Starting yield: 1.5% | Dividend growth: 12%/year | Stock appreciation: 10%/year
Year 20 portfolio value: ~$336,375
Year 20 annual income: ~$20,745

Scenario B: High Yield Portfolio

Starting yield: 8% | Dividend growth: 0% | Stock appreciation: 2%/year
Year 20 portfolio value: ~$148,600
Year 20 annual income: ~$11,888

The dividend growth portfolio wins by 2.3x in total value and 1.7x in income. And the gap only widens after year 20.

The takeaway: high yield is renting income. Dividend growth is building an income empire. Use our dividend calculator to model your own scenarios.

How to Build a Dividend Growth Portfolio on a Budget

You don't need $100K to start. Here's a beginner allocation with just $5,000:

| Stock | Allocation | Amount | Why | |-------|-----------|--------|-----| | MSFT | 20% | $1,000 | Blue-chip tech, 10% div growth | | V | 20% | $1,000 | Payment network moat, 13.5% growth | | UNH | 20% | $1,000 | Healthcare essential, 14% growth | | TGT | 20% | $1,000 | High starting yield + growth | | LOW | 20% | $1,000 | Dividend King, 18% growth |

Set up automatic monthly purchases and let DRIP reinvesting do the heavy lifting. In 10 years, this portfolio could be generating 5-7% yield on cost with significant capital appreciation.

Start for free: Moomoo gives you fractional shares so you can buy any stock with as little as $1. Or try Webull for commission-free trading.

What to Look For in a Dividend Growth Stock

Before you buy any dividend grower, check these 5 things:

Payout ratio under 60% — Room to keep raising. Over 80% is a yellow flag.
5+ years of consecutive increases — One raise isn't a pattern. Five is.
Revenue and earnings growing — Dividends follow earnings. No earnings growth = dividend growth dies.
Competitive moat — Patent protection, network effects, switching costs, or brand loyalty.
Reasonable valuation — Even great stocks can be overpriced. Use our Graham calculator to check intrinsic value.

The Bottom Line

Dividend growth investing is the poor man's path to financial freedom. It's slow. It's boring. It doesn't make for exciting cocktail party stories. But in 15-20 years, while high-yield chasers are watching their income stagnate (or worse, get cut), dividend growth investors are collecting raises every single year — raises they didn't have to negotiate for.

Start with what you have. Buy quality companies that raise dividends. Reinvest everything. Wait.

That's the whole strategy. And it works every single time.

Get started today: Open a free account with Moomoo or Webull and buy your first dividend growth stock.

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Disclaimer: This article is for educational purposes only. It is not financial advice. Always do your own research before investing. Past performance does not guarantee future results. Affiliate links may earn us a commission at no cost to you.