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9 Dividend Growth Stocks for 2021

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Originally Posted On: 9 Dividend Growth Stocks for 2021 – Engineer My Freedom


2020 was a challenging year for dividend growth stocks, as the pandemic caused some companies to suspend their dividend payouts while others slashed the amounts they paid. However, the first half of 2021 has seen considerable stability among the stock markets. Some stocks are continuing their resurgence, while others are emerging stronger from the global crisis.

With countries are coming out of nearly year-long lockdowns, will we look at the best dividend stocks to invest in in the second half of 2021?

1. Johnson & Johnson

Johnson & Johnson is among the few dividend growth stocks that were stable or rose during the pandemic. The company has three divisions dealing in medical devices, pharmaceuticals, and consumer products.

On February 6, Johnson & Johnson asked the FDA for emergency use authorization of its single-shot COVID-19 vaccine. This innovation is helping the public deal with the pandemic and has helped increase JNJ’s value.

As a dividend king, Johnson & Johnson is one of the most consistent dividend companies in the world. The company hiked its payout by 6.3% in April 2020 to $1.01 per share. Last year’s increase represents the 58th successive year that JNJ has had annual dividend growth. This track record shows that we can be hopeful for further increases in the next couple of years.

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2. AbbVie

AbbVie Inc. is a top dividend-paying firm. The company is an industry leader in the biotechnology field. Its healthcare portfolio is extensive, and it tackles the world’s leading illnesses including in the areas of virology, immunology, oncology, and neuroscience.

AbbVie helps over 52 million patients in 175 countries every year. Its highest-grossing blockbuster drug, Humira, has a market cap of over $200 billion. This medicine treats various ailments, including Crohn’s disease, arthritis, and plaque psoriasis. The company also acquired Botox maker Allergan last year to diversify its portfolio.

AbbVie has had 49 consecutive annual dividend increases. Early this year, its strong financial position saw its total revenue for the first quarter surge by 50.95% year-over-year. The increase added over $13 billion to its income. It pays a dividend of 4.9%, which will interest income-seeking investors.

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3. Walmart

Walmart doesn’t pay the highest dividend, but it is a stable and one of the most consistent dividend growth stocks. The firm has been increasing its dividend by meager pennies for the last few years. Last year, it paid out 54 cents per share. However, the company has a 46-year streak of annual payout hikes. Investors can anticipate a similar penny per share increase in 2021.

Walmart is one of the largest retail stores across the country. It has around 11,500 stores and online retail platforms under 56 banners in about 27 countries. The company has been performing steadily, even as Amazon continues to dominate the market.

Walmart offers a dividend yield of 1.5%. In addition, the company’s consistency in paying investors means your investment will have a sizeable return over time.


4. Microsoft

Microsoft is one of the largest companies worldwide. It has increased its sales regularly, and the company’s recurring revenue sources are appealing to investors. Microsoft’s 19-year streak of consecutive annual dividend increases also makes it a reasonable investment.

Microsoft has a solid balance sheet, as it has more cash and cash equivalents than debts. Its low payout ratio leaves adequate room to grow the dividend. The company’s shareholders have a stake in Windows, Office products, LinkedIn, gaming, and cloud solutions. This mix presents reliable cash flow and many growth opportunities.

Microsoft’s stock may appear too expensive at 30 times forward earnings. However, the firm has grown revenues at over 30% annually compounded over the last five years, an incredible growth for a large company.

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5. Apple

Apple is among the most profitable companies today. Its main area of success is people’s recognition and acquisition of iPhones. Millions use this device worldwide. The company also gets income from its other investments, such as Apple Pay, fitness, and cloud services.

Despite being a large enterprise, Apple continues to grow and offer investors continuous dividend payouts. The firm has grown by over 21% over the past five years. Its free cash flow has also increased by 33% over the same period. As a result, their dividend is up 53% and yields 0.6%.

While Apple’s dividend yield is low, the company has growth potential for decades. This prospect can make up for the low yield.

6. Walgreens Boots Alliance

Walgreens Boots Alliance traces its roots to one drugstore founded in 1901. The company has grown its value over the years, recording consecutive annual dividend increase for over four decades. Earlier this year, the company announced a hike of 2.2% or around 46 cents per share, highlighting its stability and growth.

Walgreen Co. merged with Alliance Boots to form the current firm in 2014. The companies have paid dividends every quartet for over 88 years. They have also raised the amount paid out to investors for 45 consecutive years.

Walgreens Boots Alliance has a dividend yield of 3.8%. In addition, the company’s consistency over the years shows it is a sound investment.

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7. WP Carey

WP Carey is an underrated stock. Its stock price has been $65-70 for months. The company had this consistency as other firms’ values dipped. However, recent earnings reports have made the stock value shutter the $70 ceiling, and it now trades for over this amount.

Despite the increase in the company’s value, the firm’s dividend yield is around 5.5%. The growing dividends back this return. WP Carey managed to withstand the pandemic’s effects, as it collected over 95% rent during the COVID-19 pandemic. As normalcy returns, WP Carey will have a strong performance as its investments reach their optimum return levels.

In early this year, the company acquired more investments after slowing down last year. As a result, it has spent over $765 million, and the company expects to invest around one billion dollars more this year. These undertakings will improve the company’s revenue and increase the amount paid out to its investors.


8. T. Rowe Price

T. Rowe Price manages over $1.47 trillion worth of assets. It has also had over 35 years of consecutive annual dividend increases, and experts expect the company to perform for many more years. In addition, TROW’s actively managed funds and its dedication to the expanding retirement market have stabilized its managed assets.

T. Rowe Price stands out as one of the best dividend stocks. It has a low payout ratio of 27%, providing adequate returns to investors. As a result, you’ll enjoy a 2.3% dividend yield, and the T. Rowe Price stock offers a $4.32 dividend yearly.

You may buy and hold T. Rowe Price’s stock. The company offers a 154% five-year return. Deciding to hold its stock is a sound investment choice. This firm’s record shows it may be an excellent investment option.

9. Texas Instruments

Texas Instruments has had 17 consecutive annual dividend increases. The chipmaker first declared dividends in 1962, and investors have enjoyed steady and growing dividends over the years.

Texas Instruments stock yields at 2.3% and bears a $4.08 annual dividend. Its five-year return is a 207% compounded return. Investors enjoy a payout ratio of about 28%.

The company’s sound investments, market position, and competitive advantage make it a promising stock. You can buy it this year to enjoy its returns.

Full disclosure, I own am Long in the following dividend growth stocks – $JNJ


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