5 Best Dividend Growth Stocks to Buy in October

Core Viewpoint - October presents opportunities and volatility in the stock market, making dividend growth stocks appealing for stability and income [1] Group 1: AbbVie - AbbVie has outperformed the S&P 500 with a 27.2% gain compared to the index's 19% rise [2] - The company offers a 3.14% yield, significantly higher than the S&P 500's average of 1.32%, but has a concerning 202% payout ratio [2] - AbbVie's forward P/E ratio is 16.4, indicating market caution regarding its transition from Humira to newer drugs [2][3] - Projected top-line growth of 5.3% for the next fiscal year suggests effective offsetting of Humira's declining sales [3] - AbbVie has a high debt-to-equity ratio of 10.4, which may limit financial flexibility [3] Group 2: American Express - American Express has seen a stock price increase of 42.6% year to date, significantly outperforming the S&P 500 [4] - The company has a 1.03% yield, but a strong 10.4% three-year dividend growth rate and a low 19.4% payout ratio indicate financial flexibility [4] - Projected top-line growth of 8.5% for the next fiscal year reflects continued consumer spending trends [4][5] Group 3: Bank of America - Bank of America has gained 16.8% this year, underperforming the S&P 500's 19.4% rise, potentially creating a value opportunity [6] - The bank offers a 2.62% yield with a conservative 33.6% payout ratio and a 7.4% three-year dividend growth rate [6][7] - Projected top-line growth of 4.5% for the next fiscal year is solid for a large bank, supported by diversified revenue streams [7] - The debt-to-equity ratio of 1.1 is typical for the banking industry, indicating manageable leverage [8] Group 4: Costco - Costco's stock has surged 32.7% year to date, outperforming the S&P 500 [9] - The company has a low 0.52% yield but an 8.82% three-year dividend growth rate and a low 26.3% payout ratio [10] - Projected top-line growth of 6.7% for the next fiscal year is driven by new store openings and increased membership fees [10] - Costco's forward P/E of 50.2 suggests a premium valuation, indicating high expectations from investors [10] Group 5: Microsoft - Microsoft has gained 12% this year, trailing the S&P 500, which may present an entry point for investors [11] - The company has a 0.77% yield and a 6.8% three-year dividend growth rate, with a low 24.8% payout ratio [11] - Projected top-line growth of 14.3% for the next fiscal year is driven by cloud computing and AI integration [11][12] - The forward P/E of 32.5 reflects growth prospects, while a low debt-to-equity ratio of 0.36 provides financial flexibility [12]