Two Outstanding Stocks with Consistent Dividend Increases Worth Investing in Currently
Dividend stocks have been the driving force behind market returns for over a century, contributing roughly two-thirds of total returns since 1900, as per a Hartford Funds report. Companies that regularly boost their dividends have shown exceptional performance, thanks to their ability to generate steady revenue growth and substantial free cash flows across various market conditions.
These dividend growth giants often share distinctive attributes that make them appealing long-term investments. They usually maintain conservatively low payout ratios, possess robust competitive advantages within their respective industries, and are known for their dependable cash flows that enable continuous dividend hikes.
This financial robustness enables them to sustain and growth their dividends even during economic downturns, providing investors with a steadily growing income no matter the market conditions.
Let's dive deeper into two noteworthy dividend growth powerhouses with established track records of delivering stellar returns to shareholders.
A pharma juggernaut with rapid dividend growth
AbbVie (ABBV 1.79%**) is a powerhouse in the immunology sphere. Although its blockbuster drug Humira faces biosimilar competition, the company's newer medications Rinvoq and Skyrizi are demonstrating remarkable results. Management's combined sales projections for these medicines have been recently revised to $31 billion by 2027, up from the previous estimate of $27 billion.
In the income investor's eye, AbbVie's dividend growth is unmatched. The company has increased its payout at an astounding 13.6% annual rate over the past decade, making it among the fastest dividend growers across major pharmaceutical firms. AbbVie's current 3.3% yield, higher than the S&P 500's yield, presents an enticing income source for shareholders.
While a lofty 259% payout ratio may raise eyebrows, this high level isn't unusual for pharmaceutical companies due to the cyclical nature of drug development. With Skyrizi and Rinvoq projected to grow 51% and 50% respectively in 2024, and their combined sales expected to grow at a more than 20% compound annual rate through 2027, AbbVie's dividend looks well-supported by its explosive growth trajectory.
In line with this, AbbVie's broader outlook remains solid, with 2024 revenue anticipated to grow 4.6% on a constant-currency basis and 2025 projections pointing towards 5.7% growth. Although AbbVie grapples with some hurdles, like pressure on its oncology drug Imbruvica and setbacks within its neuroscience program, the company's successful transition in immunology and promising early-stage pipeline, including potential ulcerative colitis treatments, underscore the strength of its innovation engine.
A financial sector stalwart with a wide economic moat
S&P Global (SPGI -1.34%) is a dominating force in financial markets. The company's wide economic moat stems from the significant switching costs and network effects built into its business model—once a benchmark is established in the financial markets, it's tough to displace.
For dividend growth investors, S&P Global offers an impressive track record. The company has increased its dividend at an annual rate of 11.7% over the previous 10 years while maintaining a responsible 29% payout ratio. While the current 0.7% yield may appear modest, S&P Global's growth trajectory suggests the potential for consistent dividend expansion.
The company's outlook remains robust, with fourth-quarter revenue increasing 14% to $3.59 billion, driven by a 54% surge in ratings transaction revenue. Management projects continued growth in 2025, with the ratings business anticipated to grow 3% to 5% despite some shifts in issuance mix. The company's market intelligence segment is also exhibiting strength, with enterprise solutions, like the one that grew 16% in the most recent quarter, showing promising results.
S&P Global's recent performance is particularly noteworthy for a company of its size. Its combination of strong growth, wide moat, and consistent dividend increases makes it an attractive option for investors seeking reliable dividend growth backed by a robust business model.
To the benefit of investors
Investors often find success through companies committed to increasing their dividends. These stocks often possess lasting competitive advantages, robust cash flows, and the capacity to flourish during diverse market climes. Both AbbVie and S&P Global showcase these traits, offering investors distinctive paths to dividend growth—AbbVie through pharmaceutical innovation and elevated current yields, and S&P Global through its entrenched market position and lower-yet-well-covered payout.
- The report by Hartford Funds highlights that dividend stocks have contributed approximately two-thirds of market returns since 1900, showcasing their significance in financial investing.
- Companies with a history of boosting their dividends often possess distinctive characteristics such as conservatively low payout ratios, robust competitive advantages, and dependable cash flows, which make them appealing long-term investments.
- S&P Global, a dominating force in financial markets, has increased its dividend at an annual rate of 11.7% over the past decade while maintaining a responsible 29% payout ratio, demonstrating its commitment to dividend growth.
- Despite facing competition and setbacks, AbbVie has shown resilience, with its new medications Rinvoq and Skyrizi demonstrating remarkable results and contributing significantly to its revenue growth, supporting its dividend growth rate of 13.6% annually.
