The 10 Best Dividend-Growing Stocks for 2023: Real Stock Market Gems to Discover!

Today, discover the top 10 stocks with growing dividends, real gems that I call the “Yield Dogs” (for Dividends Ought to Grow). Double or even triple-digit annual returns by simply letting time take its course. Prepare for unique opportunities, and remember, you’ll thank me in 20 years. Here we go!

Why look for growing dividend stocks?

For many investors, the quest for dividend income may naturally begin with companies that offer the highest yields. After all, it’s psychologically good to see a big check come in every month. These companies can be solid investments, but their high returns can also be a warning sign of danger. Because the higher the yield, the more difficult it is to maintain over time. Personally, I prefer to look for companies that pay growing dividends, that is, solid companies that should be even stronger in five or ten years. I look for dividend growth that matches the company’s underlying earnings growth. And the reason is simple: it is financially much more advantageous.

Let’s do a little simulation. Consider British American Tobacco, a cigarette manufacturer, with a current annual yield of 8.45% and a very low dividend growth of 1% per year. If I invest €100 in it, the first year I will receive a nice dividend of €8.45. The year after €8.62 and so on up to +1% per year. In the 10th year, I will receive €9.33 and in the 20th year, €10.31. After 20 years, my dividend will have only increased by 22% in total.

Now, let’s take the LVMH company with an annual yield of 1.43% and a very rapid annual dividend growth of 23%. If I invest €100 in it, the first year I will receive a tiny dividend of €1.43. Ridiculous compared to British American Tobacco. The following year €1.72 and so on up to +23% per year. The 10th year, I will receive €8.85 and the 20th year, €55. After 20 years, my dividend will have increased by 3,746% in total. So to take the LVMH example by investing €100 today, in 20 years, your yield on cost will be 55%. Whereas an investor who starts investing in the stock in 20 years, they will have the spot yield of 1 or 2% for example. A real and often-cited example is Warren Buffett’s Coca-Cola stock. Over the years, Warren Buffett paid $1.3 billion to buy 400 million Coca-Cola shares. That’s a cost per share of only $3.24. That’s the advantage of having bought them in the 1990s. Except that Coca-Cola currently pays a dividend of $1.84 per share. Buffett’s yield on his KO shares is therefore 57%. Whereas if you start investing in Coca-Cola today, your return will be 3%. In short, as you’ll have understood, today I want to present to you the crème de la crème of stocks that offer a small yield, albeit one that increases significantly, by at least 10% per year. We’ll look at the theoretical return for each one in 10 and 20 years, and you’ll see, for some, it’s completely crazy.

The 10 Best Dividend-Growth Stocks

1. Fastenal

An American manufacturer of industrial supplies, notably screws, piping, and tires. The stock price is bullish over the long term, supported by continuously growing revenue and high and stable margins, demonstrating strong competitive advantages. Debt is perfectly controlled.

Regarding the dividend, it is secure with a score of 16, distributed uninterruptedly for over 30 years, yielding 2.55% per year and increasing at an average annual rate of 14%. At this rate, your return on cost for an investment today will be 9.45% per year in 10 years and 35% per year in 20 years.

2. Texas Instruments

An American technology company known in particular for its calculators. The stock price is bullish over the long term, supported by growing revenue and earnings per share, and very high and rapidly growing margins. Debt is perfectly controlled. Regarding the dividend, it is very secure with a score of 18, distributed continuously for over 30 years, a yield of 2.81% per year and increased at an average rate of 17% annually. At this rate, your return on investment today will be 13% per year in 10 years and 65% per year in 20 years.

3. Visa

A financial sector giant with over 3.7 billion cards worldwide. The share price is bullish, supported by steadily growing revenue and earnings per share, stable and very high margins, and debt under absolute control.

Regarding the dividend, it is secure with a score of 19, distributed continuously for 15 years, a yield of 0.8% per year and increased at an average rate of 18% annually. At this rate, your return on investment cost today will be 4.2% per year in 10 years and 22% per year in 20 years.

4. Analog Devices

An American semiconductor manufacturer. The stock price is bullish, supported by strong revenue and earnings per share growth. Margins are low but growing. Debt is healthy.

Regarding the dividend, it is secure with a score of 13, distributed continuously for 20 years, yielding 1.95% per year and increasing at an average annual rate of 11%. At this rate, your return on cost for an investment today will be 5.54% per year in 10 years and 16% per year in 20 years.

5. Zoetis

A veterinary pharmaceutical company. The stock price is bullish, supported by strong revenue and earnings per share growth, stable and high margins, and controlled debt. Regarding the dividend, it is safe with a score of 15, distributed continuously for 10 years, yielding 0.91% per year and increasing at an average rate of 25% annually. At this rate, your return on investment today will be 8.5% per year in 10 years and 79% per year in 20 years.

6. Delta Plus Group

A French manufacturer of Personal Protective Equipment. The share price is bullish, supported by growing revenue, stable margins, and controlled debt.

Regarding the dividend, it is safe with a score of 16, distributed continuously for 23 years, yielding 1.52% per year and increasing at an average rate of 14% annually. At this rate, your return on investment today will be 5.6% per year in 10 years and 21% per year in 20 years. 7. Lotus

The Belgian biscuit maker famous for its red speculoos. The price is rising, supported by significant sales of its historic and timeless recipes.

8. Orpea

A French operator of retirement homes and post-acute and rehabilitation clinics. The stock price is bullish, supported by growing revenue and earnings per share, high and rapidly growing margins, and controlled debt.

Regarding the dividend, it is secure with a score of 15, distributed continuously for 10 years, yielding 0.4% per year and increasing at an average annual rate of 15%. At this rate, your return on investment today will be 5.8% per year in 10 years and 33% per year in 20 years.

9. Prodways Group

A French manufacturer of professional 3D printers and related materials. The stock price is very bullish, supported by exceptional revenue growth. Regarding the dividend, it’s safe with a score of 12, distributed continuously for 5 years, yielding 0.43% per year and increasing at an average rate of 16% annually. At this rate, your return on investment today will be 5.4% per year in 10 years and 28% per year in 20 years.

10. ASML

A world leader in the manufacturing of machines for the semiconductor industry. The share price is bullish, but the company’s exposure to geopolitical risk with China must be taken into account.

Regarding the dividend, it’s safe with a score of 15, distributed continuously for 16 years, yielding 1.48% per year and increasing at an average rate of 40% annually. Unprecedented. At this rate, your return on investment today will be 43% per year in 10 years and 100% per year in 20 years.

Conclusion

Here are the top 10 dividend-growth stocks for 2023. These companies offer excellent long-term return opportunities, combining both a secure dividend and consistent growth. Of course, it’s important to always conduct your own research and analysis before making any investment decisions. Dividend growth is a decision that rests solely with the company and is subject to change.

However, by choosing solid, well-managed companies, like those featured in this top 10, you can build a portfolio of dividend-growth stocks that will generate substantial profits over the long term. So, don’t hesitate to make informed choices and invest in promising stocks, while keeping in mind diversification and prudent investment management.

Good luck with your investments, and don’t forget to stay vigilant and informed about developments in the financial market!