10 Dividend Growth Stocks with Over 3% Yield

Vardah Gill
9 min read

In This Article:

In this article, we will discuss 10 dividend growth stocks with over 3% yield. You can skip our detailed analysis of dividend growth stocks and their performance over the years, and go directly to read 5 Dividend Growth Stocks with over 3% Yield. 

Should you invest in dividend stocks with strong history of growth in payouts or those with high yields? That's an age-old debate in the dividend investing world that keeps surfacing intermittently. Analysts tend to lean toward dividend growth as it indicates a healthy financial situation, whereas excessively high yields might suggest underlying financial troubles. The S&P 500 Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, has delivered strong returns in the past. In a blog post published in January 2019 titled “Exploring Dividend Growth Strategies for Market Downturns”, S&P’s Phillip Brzenk, global head of multi-asset indexes, analyzed how dividend growth strategies perform, particularly when the market experiences negative trends. Here are some comments from the analyst:

“Since year-end 1989, there have been six calendar years of negative performance for the S&P 500—and in all six years, the S&P 500 Dividend Aristocrats outperformed the equity benchmark by an average of 13.28%. In fact, the S&P 500 Dividend Aristocrats produced a positive total return in three of those years.”

In addition to this, the performance of dividend aristocrats has shown a consistent upward trend in different market conditions when compared with high-yield stocks. According to data from Bloomberg, dividend aristocrats delivered a 12.50% return in falling interest rate periods and an 11.55% return in rising interest rate periods between February 2005 and December 2023. On the other hand, Dow Jones U.S. Select Dividend Index returned 7.90% and 10.46% returns during falling and rising interest rate periods, respectively, underperforming dividend growth stocks.

Though dividend growth stocks are preferred over high-yield stocks, our research shows that a balance of both can offer advantages to investors, potentially maximizing risks while eliminating risks. In our article titled 15 Best S&P 500 Dividend Stocks To Buy Now, we cited S&P Dow Jones data and revealed that the S&P 500 High Dividend Growth Index, which seeks the performance of companies with minimum five consecutive years of dividend growth with an average yield of 3%, returned 11.94% on an annual average basis from 2010 to 2022, compared with an 11.88% return of the S&P 500. We also mentioned that the index’s dividend growth surpassed the US long-term inflation rate at 13.8%. The index is up by 15.15% over the past 12 months and its year-to-date returns came in at 5.71%, as of the close of May 10.

Recommended Stories