What Are Some Top Dividend Growth Stocks?


Quick Answer

Some top dividend growth stocks are United Health Group, Microsoft and Home Depot. Company size, market opportunity and management contribute to dividend growth for these companies, according to Kiplinger, business forecast publisher.

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Full Answer

Dividend growth rate measures dividend payments over the previous five years. Increasing dividend payments is a sign of continued company growth and earnings potential. Kiplinger researches companies on the Dow Jones Industrial average and selects top dividend growth stocks based on lack of competition rather than highest current yield.

In October 2014, United Health Care's five-year annualized dividend growth rate was 119 percent. The largest managed care firm benefits from the Affordable Care Act offering better cost efficiencies and prices than smaller firms, as analyzed by Vishnu Lekraj for Morningstar on Kiplinger's website. Microsoft, with a five-year rate of 19 percent, generates a lot of cash with Windows and Office franchises, which management continually distributes in dividends. Similarly, Home Depot, with a 16 percent five-year annualized rate, plans to pay out half of its profits in dividends. Kiplinger attributes the increased payments to a streamlined supply chain, better customer service and new e-commerce presence positioning Home Depot to take advantage of the U.S. housing market rebound.

Other top-performing dividend growth stocks shown on Kiplinger's website are Nike, 3M, ExxonMobil and United Technologies.

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