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3 Dividend Growers to Buy for Passive Income

Everybody loves dividends, as they provide a passive income stream, limit drawdowns in other positions, and provide more than one way to profit from an investment.

And when considering dividend-paying stocks, those with a history of boosting their payout are prime considerations, reflecting their commitment to increasingly rewarding shareholders.

In addition, consistent dividend hikes reflect the company’s successful nature, opting to share profits with shareholders.

For those seeking companies with a history of dividend growth, three stocks – Aflac AFL, Caterpillar CAT, and Applied Materials AMAT – precisely fit the criteria.

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On top of consistent dividend boosts, all three sport a favorable Zacks Rank, reflecting optimism among analysts. Let’s take a closer look at each.

Aflac

Aflac, a current Zacks Rank #1 (Strong Buy), is an American insurance company and a massive supplier of supplemental insurance within the U.S. The company has seen modest positive earnings estimate revisions among all timeframes.

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Zacks Investment Research


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AFL is a member of the elite Dividend Aristocrats group, reflecting its commitment to shareholders through a minimum of 25+ years of increased payouts. AFL shares currently yield a solid 2.2% annually, with a payout ratio sitting sustainably at 30% of its earnings.

The company’s payout has grown by 12% annually over the last five years.

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Zacks Investment Research


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Caterpillar

Caterpillar is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations shifting positively over the last several months.

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Zacks Investment Research


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Like AFL, Caterpillar is a member of the elite Dividend Aristocrats club, with shares currently yielding 1.9% annually. The company’s payout has grown by 7.4% annualized over the last five years.

In addition, CAT shares aren’t valuation stretched given its growth trajectory, with earnings forecasted to climb 40% in its current year on 12% higher revenues. Shares presently trade at a 13.8X forward earnings multiple, beneath the 15.8X five-year median and high of 21.4X in 2022.

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Zacks Investment Research


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Applied Materials

Applied Materials provides manufacturing equipment, services, and software to the semiconductor, display, and other related industries. The stock is a Zacks Rank #2 (Buy), with earnings expectations increasing nicely across all timeframes.

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Zacks Investment Research


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The company’s shares currently yield a respectable 0.9% annually paired with a sustainable payout ratio sitting at 16% of the company’s earnings. While the yield may be on the lower end, AMAT’s 6.5% five-year annualized dividend growth rate helps bridge the gap.

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Zacks Investment Research


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In addition, AMAT’s 49.1% trailing twelve-month return on equity is worth highlighting, above the respective Zacks industry average and reflecting improving efficiency in generating profits from existing assets.

Bottom Line

Companies that consistently boost their dividend payouts reflect a successful and shareholder-friendly nature, opting to share a portion of profits with investors.

And for those seeking dividend growers, all three companies above – Aflac AFL, Caterpillar CAT, and Applied Materials AMAT – precisely fit the criteria.

All three have grown their payouts nicely over the years and sport favorable Zacks Ranks, undoubtedly a strong pairing.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Caterpillar Inc. (CAT) : Free Stock Analysis Report

Aflac Incorporated (AFL) : Free Stock Analysis Report

Applied Materials, Inc. (AMAT) : Free Stock Analysis Report

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