If you’re looking for a top dividend stock to own, you want to be sure to consider whether it increases its payout and keep track of how quickly it normally does so. The rate of increases can be key to ensuring that inflation isn’t eating up your dividend income over time. It also demonstrates to investors just how committed the company is to increasing the dividend.
Three stocks that pay dividends and have been among the most generous when it comes to raising their payouts include UnitedHealth Group (NYSE: UNH), Broadcom (NASDAQ: AVGO), and Costco Wholesale (NASDAQ: COST). Here’s why these three dividend payers can be ideal income-generating investments to buy and hold right now.
Health insurance giant UnitedHealth Group pays investors a dividend that yields 1.6%. That’s not a whole lot higher than the S&P 500 average of 1.3%, but the value in holding the dividend stock is for its growth.
UnitedHealth is a growing business that benefits from more people using its health insurance and from expansion and acquisitions. The company’s profit margin is less than 4%, but it has generated nearly $390 billion in revenue over the trailing 12 months, which adds up to more than $14 billion in profit.
Over the past decade, the company has aggressively grown its quarterly per-share dividend from $0.375 back in 2014 to $2.10 today. That’s an increase of 460%, which averages out to an annual bump of around 19%, well above even the elevated inflation rates seen over the past couple of years. It’s a staggering amount, and with a payout ratio of just 52%, there’s still room for the healthcare company to continue making generous increases in the future.
Investors have been bullish on Broadcom due to its opportunities in the semiconductor space, but it also doubles as a fantastic dividend stock. As with UnitedHealth, its yield looks fairly unimpressive at just 1.2%. However, if not for Broadcom stock’s fantastic 120% rally over the past 12 months, that yield would be a whole lot higher right now.
Last month, Broadcom raised its dividend by 11% to $0.59 per quarter. A decade ago, the company was paying just $0.035, and the tech company has aggressively boosted its payout by nearly 1,600% during that stretch. That averages out to 33% per year. This has clearly slowed down, as evidenced by the most recent increase, but it’s still a testament to the company’s focus on dividend growth.
Broadcom’s plentiful growth opportunities due to artificial intelligence and hyperscalers investing heavily in their operations make it probable that this will continue to be a solid dividend growth stock for the foreseeable future.
