6 Dividend Growth Stocks That Can Provide a Lifetime of Passive Income

Core Insights - The article emphasizes the importance of selecting dividend stocks based on sustainability and growth potential rather than just high current yields [1][3] Dividend Stock Selection Criteria - Investors should look for a conservative payout ratio below 50% to ensure financial stability [2] - A history of annual dividend increases over multiple decades is crucial for long-term investment [2] - A strong economic moat is necessary to protect profitability and ensure consistent returns [2] Featured Dividend Growth Stocks - Target (TGT): - 53 years of consecutive dividend increases with a current yield of 2.9% and a payout ratio of 45% [4] - Five-year annualized dividend growth rate of 10.4% and a projected P/E ratio of 14.5 for 2026 [5] - Economic moat derived from strong brand recognition and efficient supply chain [5] - Parker-Hannifin (PH): - 68 consecutive years of dividend increases with a current yield of 1.1% and a payout ratio of 27.8% [6] - Five-year annualized dividend growth rate of 13.2% and a projected P/E ratio of 20.2 for 2026 [7] - Economic moat based on technological expertise and strong OEM relationships [7] - W.W. Grainger (GWW): - 53 years of consecutive dividend increases with a current yield of 0.8% and a payout ratio of 20.9% [8] - Five-year annualized dividend growth rate of 6% and a projected P/E ratio of 21.3 for 2026 [9] - Economic moat from vast distribution network and economies of scale [9] - Tennant (TNC): - 52 consecutive years of dividend increases with a current yield of 1.2% and a payout ratio of 19% [10] - Five-year annualized dividend growth rate of 4.9% and a projected P/E ratio of 14 for 2026 [11] - Economic moat based on innovative product development and strong brand reputation [11] - Walmart (WMT): - 51 years of consecutive dividend increases with a current yield of 1.1% and a payout ratio of 41.4% [12] - Five-year annualized dividend growth rate of 1.5% and a projected P/E ratio of 28 for 2026 [13] - Economic moat from massive scale and efficient supply chain [13] - S&P Global (SPGI): - 51 consecutive years of dividend increases with a current yield of 0.7% and a payout ratio of 34.3% [14] - Five-year annualized dividend growth rate of 6.3% and a projected P/E ratio of 28 for 2026 [15] - Economic moat based on strong reputation and critical market role [15] Portfolio Strategy - Combining these dividend growth stocks into a diversified portfolio can enhance overall yield and growth while mitigating risk [15][16] - Investors may want to select only one of the two big-box retailers, Target or Walmart, for diversification purposes [16]