15 Best Large-Cap Dividend Growth Stocks To Buy Now
In this article, we discuss 15 best large-cap dividend growth stocks to buy now. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best Large-Cap Dividend Growth Stocks To Buy Now.
The performance of large-cap stocks remained strong over the years. According to a report by JPMorgan Wealth Management, large-cap stocks delivered a 162% trailing 10-year return from 2013 to March 2023, compared with 139% and 108% returns of mid-cap and small-cap stocks during the same period. The report also mentioned that large-cap stocks contribute to capital appreciation for investors over the long term. Schroders also highlighted that the performance of large-cap and small-cap stocks has shown variations during periods of recession and expansion. Since the late 1980s, large-cap stocks delivered an 8.5% annualized net total return during periods of expansion and slowdown, whereas small-cap stocks returned 5.5% on an annual basis. However, small-cap stocks outperformed large-caps during periods of recession and recovery.
Don't Miss: 15 High Growth Large Cap Stocks to Invest In.
As high inflation has turned investors’ attention toward dividend stocks, large-cap companies are becoming their top choices because they offer them stability and diversification. Moreover, large-cap companies that pay strong dividends can provide investors with a regular income stream, which can be especially appealing to those who are looking for income in retirement or who want to supplement their other sources of income. Some of the best dividend stocks from the large-cap sector include Visa Inc. (NYSE:V), AbbVie Inc. (NYSE:ABBV), and JPMorgan Chase & Co. (NYSE:JPM).
Our Methodology:
For this list, we scanned Insider Monkey's database of 943 hedge funds as of the fourth quarter of 2022 and picked dividend-paying companies with a market capitalization of $10 billion or more. From that list, we shortlisted stocks that have 5-year average dividend growth rates of above 10%. We sorted these companies based on the number of hedge funds in Insider Monkey’s database that owned stakes in these companies.
Best Large-Cap Dividend Growth Stocks To Buy Now
15. Nordson Corporation (NASDAQ:NDSN)
Number of Hedge Fund Holders: 25
5-Year Average Dividend Growth Rate: 16.02%
Nordson Corporation (NASDAQ:NDSN) is an American company that manufactures differentiated products used for dispensing adhesives, coatings, and other materials. In August 2022, the company hiked its dividend by 28% and currently pays a quarterly dividend of $0.65 per share. The company is a Dividend King with 59 years of consecutive dividend growth. Its 5-year average dividend growth came in at 16.02%, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 1.19%, as of April 25.
Other dividend stocks that are grabbing investors' attention include Visa Inc. (NYSE:V), AbbVie Inc. (NYSE:ABBV), and JPMorgan Chase & Co. (NYSE:JPM).
Nordson Corporation (NASDAQ:NDSN) reported a strong cash position in its fiscal Q1 2023 earnings, which shows that the company's dividends are secure. Its operating cash flow for the quarter came in at over $123.3 million, compared with $118 million in the same period last year. At the end of January 2023, the company had roughly $122 million available in cash and cash equivalents.
At the end of Q4 2022, 25 hedge funds in Insider Monkey’s database owned stakes in Nordson Corporation (NASDAQ:NDSN), compared with 26 in the previous quarter. The collective value of these stakes is over $284.3 million.
14. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Number of Hedge Fund Holders: 29
5-Year Average Dividend Growth Rate: 14.8%
T. Rowe Price Group, Inc. (NASDAQ:TROW) is an American investment management company, based in Maryland. The company offers investment-related services to institutions and individuals. The company reported a growth in its assets under management in March, which was lauded by Street analysts. In April, Wells Fargo raised its price target on the stock to $115 with an Equal Weight rating on the shares.
In the past five years, T. Rowe Price Group, Inc. (NASDAQ:TROW) has raised its dividend by 14.8% on average. This growth rate accelerated when the company raised its dividend by 18.4% in 2020, followed by a 20% growth in 2021. It currently pays a quarterly dividend of $1.22 per share and has a dividend yield of 4.34%, as of April 25. It is one of the best dividend stocks on our list as it has raised its dividends consistently for the past 37 years.
T. Rowe Price Group, Inc. (NASDAQ:TROW) remained committed to its shareholder obligation in 2022, returning over $1.1 billion to investors in dividends. Moreover, the company also repurchased shares of its common stock worth roughly $850 million.
Of the 943 hedge funds tracked by Insider Monkey, 29 hedge funds owned stakes in T. Rowe Price Group, Inc. (NASDAQ:TROW) in Q4 2022, with a total value of over $422.3 million. Among these hedge funds, Citadel Investment Group was the company’s leading stakeholder in Q4.
13. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 36
5-Year Average Dividend Growth Rate: 12.6%
United Parcel Service, Inc. (NYSE:UPS) is a multinational shipping and supply chain management company. The company has a 13-year run of raising its dividend and has also been making dividend payments for the past 21 years. It currently offers a quarterly dividend of $1.62 per share, growing its payouts by 12.6% on average in the past five years. The stock's dividend yield on April 25 came in at 3.31%. It is among the best dividend stocks on our list.
In its recently-announced Q1 2023 results, United Parcel Service, Inc. (NYSE:UPS) reported revenue of roughly $23 billion, down from $24.4 billion in the same period last year. During the quarter, the company generated over $2.3 billion in operating cash flow and its free cash flow came in at $1.77 billion.
For FY23, United Parcel Service, Inc. (NYSE:UPS) expects to distribute approximately $5.4 billion in dividends with share repurchases of around $3 billion.
Melius Research initiated its coverage of United Parcel Service, Inc. (NYSE:UPS) in March with a Buy rating and a $225 price target. The firm appreciated the company's performance during the market downturn in 2022.
At the end of December 2022, 36 hedge funds tracked by Insider Monkey reported having stakes in United Parcel Service, Inc. (NYSE:UPS), with a total value of over $5.1 billion.
Madison Investments mentioned United Parcel Service, Inc. (NYSE:UPS) in its Q1 2023 investor letter. Here is what the firm has to say:
“This quarter we are highlighting United Parcel Service, Inc. (NYSE:UPS) as a relative yield example in the Industrials sector. UPS is the industry leader in global transportation services as the largest parcel delivery and logistics firm in the world. We believe it has a sustainable competitive advantage due to high barriers to entry, its low-cost position in the industry, economies of scale benefits, and strong brand recognition. It has a global network of assets including planes, trucks, sorting facilities, and technology that would be difficult to replicate. UPS enjoys the #1 market position in an attractive oligopoly, ahead of competitors FedEx and DHL. Unlike FedEx, UPS operates a single network that handles ground and express packages, which results in industry-best package density and operating margins.
Our thesis on UPS is that it is well-positioned to benefit from a secular trend of growth in e-commerce and onshoring of manufacturing supply chains. Package volumes and revenues are likely to benefit as more e-commerce transactions occur over the next several years. UPS should also benefit as many companies alter supply chains and bring manufacturing operations back to the US. Importantly, we believe UPS has a strong management team that focuses on profitable growth and is willing to pass on unprofitable business. This was demonstrated in 2021 when UPS divested UPS Freight, which was its less-than-truckload business. We applaud the focus on improving returns on invested capital through a “better, not bigger” strategy…” (Please click here to read the full text)
12. The Allstate Corporation (NYSE:ALL)
Number of Hedge Fund Holders: 37
5-Year Average Dividend Growth Rate: 16.99%
The Allstate Corporation (NYSE:ALL) is an Illinois-based insurance company that provides services in supplemental insurance coverage. In April, BofA lifted its price target on the stock to $147 with a Buy rating on the shares, highlighting the company's performance in its most recent quarter.
The Allstate Corporation (NYSE:ALL), one of the best dividend stocks, has raised its dividends consistently for the past 15 years. Its 5-year average dividend growth rate stands at 16.9%. It currently pays a quarterly dividend of $0.89 per share and has a dividend yield of 3.07%, as of April 25.
The Allstate Corporation's (NYSE:ALL) cash position remained stable in 2022 with a total of $736 million available in cash. The company also paid $3.4 billion to shareholders in dividends and share repurchases through the year.
The number of hedge funds tracked by Insider Monkey owning stakes in The Allstate Corporation (NYSE:ALL) stood at 37 in Q4 2022. The stakes owned by these hedge funds have a total value of over $401 million.
11. Automatic Data Processing, Inc. (NASDAQ:ADP)
Number of Hedge Fund Holders: 49
5-Year Average Dividend Growth Rate: 13.80%
Automatic Data Processing, Inc. (NASDAQ:ADP) is an American management services company, based in New Jersey. On April 12, the company declared a quarterly dividend of $1.25 per share, which was in line with its previous dividend. In the past five years, it has raised its dividends at an annual average rate of 13.8% and maintains a 48-year streak of dividend growth. The stock has a dividend yield of 2.32%, as of April 25.
In fiscal Q2 2023, Automatic Data Processing, Inc. (NASDAQ:ADP) generated over $1.6 billion in operating cash flow, up from $1.2 billion reported during the same period last year. The company paid $865.5 million in dividends to shareholders, which makes it one of the best dividend stocks on our list.
Citigroup maintained a Neutral rating on Automatic Data Processing, Inc. (NASDAQ:ADP) in March with a $235 price target, expressing concerns about growing inflation.
According to Insider Monkey's database for Q4 2022, 49 hedge funds owned stakes in Automatic Data Processing, Inc. (NASDAQ:ADP), compared with 48 in the previous quarter. The collective value of these stakes is over $3.5 billion.
Madison Investments mentioned Automatic Data Processing, Inc. (NASDAQ:ADP) in its Q1 2023 investor letter. Here is what the firm has to say:
“We eliminated Automatic Data Processing, Inc. (NASDAQ:ADP) from the portfolio due to concerns that the economy is close to a peak job market and interest income on the company’s float has also peaked along with interest rates. The company’s valuation does not reflect the potential downside in the job market from a weakening economy.”
10. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 60
5-Year Average Dividend Growth Rate: 12.45%
An American medical device and healthcare company, Abbott Laboratories (NYSE:ABT) is next on our list of the best dividend stocks. Raymond James raised its price target on the stock to $123 with an Overweight rating on the shares, appreciating the company's solid performance in its recent quarter. The firm noted that the company has shown over 10% growth in three of its four segments.
Abbott Laboratories (NYSE:ABT) is a Dividend King with 51 years of consecutive dividend growth. Moreover, it has raised its payouts at an annual average rate of 12.45% in the past five years, which makes it one of the best dividend stocks on our list. The company currently pays a quarterly dividend of $0.51 per share for a dividend yield of 1.85%, as of April 25.
Insider Monkey's Q4 2022 database shows that 60 hedge funds owned stakes in Abbott Laboratories (NYSE:ABT), compared with 62 in the previous quarter. These stakes are collectively valued at over $3.2 billion.
Polen Capital mentioned Abbott Laboratories (NYSE:ABT) in its Q1 2023 investor letter. Here is what the firm has to say:
“As stated below in the portfolio activity section, Abbott Laboratories (NYSE:ABT) is expected to see roughly $6 billion in COVID test sales evaporate this year, creating a headwind for margins and underlying earnings per share. As long-term owners of the business, these test sales were never part of our original investment case. The core business, our primary focus, has a clear path of growing high single digits in 2023 with durable growth beyond, in our view. We believe the current price of 23x NTM P/E , while reasonable, is also misleading considering earnings this year will be artificially depressed because of the drop in COVID testing sales. On normalized earnings, the price is lower. We anticipate underlying EPS growth of at least low-teens over the next three to five years.
Lastly, we trimmed Abbott Laboratories, bringing it back to a more average position size and to also fund our increase in Thermo Fisher. Abbott is entering a year in which the company is expected to see approximately $6bn in COVID-19 test sales disappear, thus, creating a headwind for margins and EPS. That said, the core business has a clear path to growing high single digits in FY23. EPS grew at a 20% CAGR from 2019-2022, far beyond our expectations when we initiated our investment. Now, we expect a more normal growth rate of low teens EPS beyond this year. Further, management’s adeptness at allocating capital continues to impress us. We expect Abbott to drive top line growth without heavily investing in R&D and SG&A this year— management effectively “front-loaded” those investments in 2021 and 2022 when COVID test sales created a bolus of cash. We believe this should allow for leverage on the operating margin going forward. Combined, Abbott and Thermo Fisher now represent 7% of the Portfolio.”
9. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 61
5-Year Average Dividend Growth Rate: 11.43%
NextEra Energy, Inc. (NYSE:NEE) is a Florida-based renewable energy company. In its recently-announced Q1 2023 earnings, the company posted revenue of $6.7 billion, which showed a 132.5% growth from the same period last year. It expects to grow dividends per share at a roughly 10% rate per year through at least 2024.
NextEra Energy, Inc. (NYSE:NEE) currently offers a quarterly dividend of $0.4675 per share for a dividend yield of 2.37%, as of April 25. The company has raised its dividends for 27 years in a row with a five-year average annual dividend growth of 11.43%. It is among the best dividend stocks on our list.
At the end of Q4 2022, 61 hedge funds tracked by Insider Monkey owned investments in NextEra Energy, Inc. (NYSE:NEE), worth over $2.15 billion collectively. With over 2.6 million shares, Citadel Investment Group was the company's leading stakeholder in Q4.
ClearBridge Investments mentioned NextEra Energy, Inc. (NYSE:NEE) in its Q3 2022 investor letter. Here is what the firm has to say:
“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”
8. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 61
5-Year Average Dividend Growth Rate: 16.3%
Texas Instruments Incorporated (NASDAQ:TXN) is a semiconductor manufacturing company, based in Texas, US. In April, Oppenheimer raised its price target on the stock to $195 with an Outperform rating on the shares. The firm mentioned that the company's Auto business will remain a bright spot near term.
On January 19, Texas Instruments Incorporated (NASDAQ:TXN) declared a quarterly dividend of $1.24 per share, consistent with its previous dividend. The company maintains a 19-year streak of consistent dividend growth, which makes it one of the best dividend stocks on our list. In the past five years, it has raised its dividends at an annual average rate of 16.3%. The stock has a dividend yield of 2.82%, as of April 25.
At the end of December 2022, 61 hedge funds in Insider Monkey’s database owned stakes in Texas Instruments Incorporated (NASDAQ:TXN), up from 59 in the previous quarter. These stakes have a collective value of nearly $2 billion.
7. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 68
5-Year Average Dividend Growth Rate: 20.06%
Lowe’s Companies, Inc. (NYSE:LOW) is an American retail company that specializes in home improvement. In the past five years, the company has raised its dividends at an annual average rate of 20.06%, mainly due to its 31% dividend hike in 2022. Overall, it has raised its payouts for 59 years in a row. It currently pays a quarterly dividend of $1.05 per share for a dividend yield of 1.99%, as of April 25.
At the end of January 2023, Lowe’s Companies, Inc. (NYSE:LOW) had over $1.34 billion in cash and cash equivalents, compared with $1.13 billion during the same period last year. In FY23, it reported an operating cash flow of over $8.5 billion. The company's strong cash position makes it one of the best dividend stocks on our list.
As of the close of Q4 2022, 68 hedge funds in Insider Monkey's database owned stakes in Lowe’s Companies, Inc. (NYSE:LOW), up from 61 in the preceding quarter. The total value of these stakes is roughly $5.7 billion. Pershing Square was the company's leading stakeholder in Q4, with stakes worth over $2 billion.
6. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 71
5-Year Average Dividend Growth Rate: 11.1%
NIKE, Inc. (NYSE:NKE) ranks sixth on our list of the best dividend stocks on our list. In April, BMO Capital maintained an Overweight rating on the stock, highlighting the company's growth in unit sales and improving gross margins in North America.
NIKE, Inc. (NYSE:NKE) currently offers a quarterly dividend of $0.34 per share. The company has been raising its dividends consistently for the past 21 years, with 5-year average dividend growth of 11.1%. The stock has a dividend yield of 1.07%, as recorded on April 25. In addition to this, Visa Inc. (NYSE:V), AbbVie Inc. (NYSE:ABBV), and JPMorgan Chase & Co. (NYSE:JPM) are some other best dividend stocks within the large-cap category.
At the end of Q4 2022, 71 hedge funds tracked by Insider Monkey owned stakes in NIKE, Inc. (NYSE:NKE), up from 70 in the previous quarter. These stakes have a collective value of over $4 billion.
RiverPark Advisors mentioned NIKE, Inc. (NYSE:NKE) in its Q4 2022 investor letter. Here is what the firm has to say:
“NIKE, Inc. (NYSE:NKE) shares were a top contributor for 4Q as the company reported solid 2Q23 results and raised its annual guidance. Nike reported 17% revenue growth (27% on a currency neutral basis) and $0.85 EPS, both significantly greater than expectations. Management raised its F23 outlook to low teens currency-neutral revenue growth.
Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $46 billion in revenue, $6 billion in 2021 annual free cash flow, and over $4 billion of excess cash. We believe that the continued global secular growth trend towards active wear will continue to aid Nike’s top-line growth, while we expect gross and operating margin improvements as it shifts its product mix to more premium products and adopts a more direct to consumer approach, driving long-term mid-teens or higher annual EPS growth for the foreseeable future.”
Click to continue reading and see 5 Best Large-Cap Dividend Growth Stocks to Buy Now.
Suggested articles:
Disclosure. None. 15 Best Large-Cap Dividend Growth Stocks To Buy Now is originally published on Insider Monkey.