Investors seeking to amass a passive income stream often gravitate towards dividend-paying stocks. However, the wise among them know to look beyond immediate returns and focus on companies that consistently boost their payouts year after year, transforming a modest initial investment into a lucrative income source.
Successful dividend growers typically exhibit three key traits: a conservative payout ratio, ensuring sustainability through economic fluctuations; a track record of annual dividend increases, signaling financial stability and shareholder commitment; and strong business fundamentals that safeguard the cash flows underpinning these escalating payments.
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Let’s explore seven companies that have proven their mettle in consistently growing dividends over time. From retail behemoths to tech innovators, each brings a unique strength to an income-oriented portfolio.
Unlocking Returns in the Retail Sector
TJX Companies (NYSE: TJX), a player in off-price retail through brands like T.J. Maxx and Marshalls, boasts an enticing dividend profile. With a 10.7% annual dividend growth rate in the past five years and a conservative 33.2% payout ratio, TJX offers a sustainable 1.3% yield.
Trading at 26.3 times projected 2026 earnings, TJX commands a premium over the S&P 500. Leveraging an established sourcing network, the company enjoys offering branded merchandise at attractive discounts.
Steady Dividend Performance in Healthcare
UnitedHealth Group (NYSE: UNH), the largest U.S. healthcare firm, couples insurance services with the Optum healthcare delivery platform. Growing its dividend at a 14.2% annual clip over five years, UnitedHealth’s 1.49% yield is backed by a 51.7% payout ratio.
Trading at 16.5 times projected 2026 earnings, UnitedHealth trades at a discount to the S&P 500, benefitting from its integrated healthcare model and substantial scale in a competitive sector.
Software Strengthens Dividend Growth
Microsoft (NASDAQ: MSFT), a cloud computing and software leader, exhibits consistent dividend growth. With a 10.2% annual increase in dividends over five years and a 0.78% yield backed by a modest 24.8% payout ratio, Microsoft shines.
Traded at 28.2 times projected 2026 earnings, Microsoft’s Azure cloud platform and enterprise software drive dependable recurring revenue.
Rock-Solid Returns in Semiconductors
Texas Instruments (NASDAQ: TXN), a major analog and embedded processing chip producer, boasts a top-tier dividend program. Growing dividends at an 11% annual rate over five years, Texas Instruments offers a noteworthy 2.7% yield sustained by an 89% payout ratio.
With shares trading at 28.4 times projected 2026 earnings, Texas Instruments’ focus on long-lifecycle semiconductor products across diverse industries fortifies its foundation for future growth.
Industrial Gases Fuel Growth Trajectory
Linde (NASDAQ: LIN), a global industrial gases and engineering leader, showcases robust dividend growth. Increasing dividends at a 13.9% annual rate over five years, Linde’s 1.16% yield, supported by a 40.5% payout ratio, underscores its strength.
Traded at 25.5 times projected 2026 earnings, Linde commands a premium over the S&P 500, upheld by long-term customer contracts and high switching costs that fortify its competitive position.
Scientific Expertise Driving Returns
Danaher (NYSE: DHR), a developer in life sciences and diagnostics, excels in the dividend growth domain. Growing dividends at a 12% annual rate over five years, Danaher’s 0.41% yield supported by a conservative 24.9% payout ratio reflects its deep scientific prowess.
With shares trading at 26.6 times projected 2026 earnings, Danaher thrives on recurring revenue streams and extensive scientific expertise driving market leadership.
Premium Payments Drive Growth Trajectory
American Express (NYSE: AXP), a premium payment services leader, showcases steady dividend growth. Boasting an 11% annual dividend growth rate over five years, American Express’ 1.03% yield, supported by a conservative 19.8% payout ratio, epitomizes reliability.
Trading at 15.8 times projected 2026 earnings, American Express presents an attractive entry point for long-term investors. Its closed-loop network and premium cardholder base form strong revenue pillars, safeguarding its robust dividend program.
Strategic Investments and The Road Ahead
Before jumping into TJX Companies, it’s wise to ponder this: the Motley Fool Stock Advisor team has identified the 10 best stocks poised for growth, and TJX isn’t in the mix. Recall when Nvidia made the same list in April 2005 – a $1,000 investment would now sit at a staggering $860,447!*
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American Express is an advertising partner of The Ascent, a Motley Fool company. George Budwell has positions in Microsoft. The Motley Fool has positions in and recommends Danaher, Linde, Microsoft, and Texas Instruments. The Motley Fool recommends TJX Companies and UnitedHealth Group and recommends options on Microsoft. The Motley Fool has a disclosure policy.