3 Overlooked Dividend Growers With 10%+ Annual Dividend Increases

Investors usually focus on stocks that already have stellar dividend yields, but your portfolio could also benefit from dividend growers. There are companies with solid fundamentals with a history of growing their dividends annually by over 10%. The stocks I will be looking at today have a dividend growth rate (per share) of above 10%, and analysts also expect dividend growth rates to be above that level in the future.

The main appeal is not the current dividend itself, but rather the compounding potential. The rule of 72 means a 10% dividend growth rate would double dividends every 7.2 years. If you are looking to invest for decades, it’s worthwhile to consider those deals. Here are three to look into:

Taiwan Semiconductor (TSM)

Taiwan Semiconductor (NYSE:TSM) is a solid stock you can’t be wrong on if you are looking to invest for the long run. Almost the entire world relies on this company’s semiconductors, and that obviously includes all the fabless chip companies and hyperscalers. Nvidia (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), and all their cloud customers run on Taiwan Semi’s customers. And they don’t have a good alternative.

The only argument against a long-term investment here is the geopolitical risks surrounding Taiwan. However, the stock already trades at a discount because of that, and TSMC is building out manufacturing in the U.S. to make the supply chain more reliable. The earnings multiple at 25 times makes it cheaper than 64.5% of companies in the semiconductor industry, despite it being the most important one.

The growth metrics and the fundamentals are obviously stellar due to the ongoing chip boom. The 3-year growth rate is at 22.2% annually and is better than 85.7% of its peers. Analysts expect the revenue growth rate to be around 20.3% annually going forward, with a 3-year EPS growth rate (minus non-recurring items) at 21.5%. As such, there should be plenty of room for revenue growth.

The 3-year dividend growth rate is at 12.6% annually, with a forward dividend yield of 1.7%. The dividend payout ratio at 32% is also much lower than the 47% historical payout ratio over the past decade.

Visa (V)

Visa (NYSE:V) is one of the most consistent and stable stocks you can buy right now. The company benefits regardless of recessions. It also does well regardless of the interest rate regime. When interest rates are low, Visa benefits from the increased consumer spending. Conversely, when interest rates are higher, it benefits from the higher lending rates on credit cards and the increased borrowing in a restrictive environment.

Recent macros have shown consumer spending remaining strong despite tariffs and a negative GDP growth. There has been some strain, but it’s unlikely to linger around as the Federal Reserve has said time and time again that it would step in whenever the economy needs it. As a result, consumer spending is expected to continue going up in the long run, and Visa should rise in tandem.

It has a modest dividend yield of 0.62%, but the payout ratio is low at just 21%, and the 3-year dividend growth rate is at 17.6% annually. Visa also has a 3-year average share buyback ratio of 3.2%, which is better than 90.2% of companies in its industry. Outstanding shares have been reduced by 126 million in the past year, and combined with those dividends and the fundamentals, it could lead to significant compounding over the coming decades.

Novo Nordisk (NVO)

Novo Nordisk (NYSE:NVO) has had plenty of setbacks in the past couple of months that have caused it to fall from its grace. The most recent news is that its CEO is stepping down, and it has also seen a market share erosion due to Eli Lilly (NYSE:LLY) competing with it. Some studies have also shown that the active ingredients in Eli Lilly’s drugs have caused greater weight loss than those of Novo Nordisk’s. Those troubles have caused the company to re-adjust its growth outlook for the year.

Regardless, Novo Nordisk is positioned well for long-term growth. It has lots of drugs in its pipeline to start making a comeback and has partnered up with Hims & Hers (NYSE:HIMS) to hold on to its market share.

Even a declining market share shouldn’t lead to a collapse here, since the weight loss market is growing massively. It is big enough and will be big enough in the future to accommodate both Eli Lilly and Novo Nordisk.

NVO stock is also sitting at a 52% discount from its peak and offers a solid long-term entry point. It has a 2.43% dividend yield with a 3-year dividend growth rate of 28.4% annually. Novo Nordisk also does buybacks, with the 3-year average share buyback ratio at 1.3% annually.

And even though it is losing market share, sales are still expected to grow at around 14.3% annually this decade. Paying 20 times earnings for that high-margin growth makes it pretty cheap.

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