Discovering Steady Income: 7 Companies with Strong Dividend Growth

Many investors are drawn to dividend-paying stocks as a way to build passive income. Instead of focusing solely on current yields, savvy investors seek companies known for steadily increasing their payouts. Over time, a modest initial investment can evolve into a significant income stream.

Successful dividend-growing companies typically share three key traits:

• A conservative payout ratio that ensures dividends are sustainable during different business cycles.
• A consistent history of annual increases that reflects financial strength and dedication to shareholders.
• Strong business fundamentals that safeguard the cash flows necessary for these growing payments.

Image source: Getty Images.

Let’s delve into seven companies that have shown a reliable ability to grow their dividends over time. These firms range from major retailers to technology leaders, each contributing uniquely to an income-focused investment approach.

Retail Giants Yielding Strong Returns

TJX Companies (NYSE: TJX), which operates renowned off-price retail stores such as T.J. Maxx, Marshalls, and HomeGoods, offers an attractive dividend. Over the past five years, the company has grown its dividend by 10.7% annually, sustained by a conservative 33.2% payout ratio that supports its current yield of 1.3%.

Currently, TJX trades at 26.3 times its projected earnings for 2026, presenting a premium compared to the S&P 500. The company leverages its established sourcing network to provide branded products at significant discounts.

Healthcare’s Reliable Dividend Champion

UnitedHealth Group (NYSE: UNH) stands as the largest healthcare company in America by revenue. It combines insurance services with its Optum healthcare delivery platform. UnitedHealth has increased its dividend by 14.2% annually over the last five years, yielding 1.49%, with a payout ratio of 51.7%.

With a current trading value of 16.5 times projected earnings for 2026, UnitedHealth is priced below the S&P 500. The company’s comprehensive healthcare model and substantial scale provide significant advantages in the competitive healthcare sector.

Software’s Dividend Resilience

Microsoft (NASDAQ: MSFT), a frontrunner in cloud computing and enterprise software, consistently demonstrates strong dividend growth. The company has raised its dividend by 10.2% annually in the past five years, with a yield of 0.78% that is supported by a conservative payout ratio of 24.8%.

Trading at 28.2 times projected earnings for 2026, Microsoft’s valuation is higher than the S&P 500. Its cloud platform, Azure, and enterprise software solutions generate substantial recurring revenue.

Semiconductors with Steady Income

Texas Instruments (NASDAQ: TXN) is recognized for its strong dividend program as a major player in producing analog and embedded processing chips. Over the past five years, Texas Instruments has grown its dividend by 11% annually, providing a noteworthy yield of 2.7% with a payout ratio of 89%.

The company’s shares trade at 28.4 times projected earnings for 2026, signifying a premium to the S&P 500. Its emphasis on long-lifecycle semiconductor products accommodates a diverse range of customers across various industries, positioning Texas Instruments well for future growth.

Industrial Gases with Consistent Growth

Linde (NASDAQ: LIN), a global leader in industrial gases and engineering, boasts impressive dividend growth. The company has raised its dividend at an annual rate of 13.9% over the last five years, currently offering a yield of 1.16%, backed by a 40.5% payout ratio.

Linde trades at 25.5 times projected earnings for 2026, reflecting a significant premium to the S&P 500. The company’s long-term customer contracts and the challenges competitors face to enter the market help justify its higher valuation.

Scientific Innovation Fuels Returns

Danaher (NYSE: DHR), a developer of life sciences and diagnostic technology, is a well-established player in dividend growth. The company has increased its dividend by 12% annually in the last five years, offering a yield of 0.41%, supported by a conservative payout ratio of 24.9%.

Danaher’s shares trade at 26.6 times projected earnings for 2026, again reflecting a premium compared to the S&P 500. Its business model benefits from recurring revenue and deep expertise in its fields.

Reliable Payments Fueling Growth

American Express (NYSE: AXP), a leader in premium payment services, shows a solid track record in dividend growth. Over the past five years, the company has increased its dividend at a rate of 11% annually. Currently, it offers a yield of 1.03%, sustained by a conservative payout ratio of 19.8%.

Trading at 15.8 times projected earnings for 2026, American Express is seen as an appealing entry for long-term investors. Its closed-loop network captures significant merchant fees and transaction volumes, which further supports its robust dividend program.

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*Stock Advisor returns as of October 21, 2024

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 has the following positions: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.