Wall Street Loves These 10 Dividend-Growth Stocks

If you look at the world of dividend-growth stocks, you’ll find a lot of bullish sentiment from the Wall Street professionals tasked with researching these companies.

It’s not difficult to see why.

A dividend program, in and of itself, is a powerful statement by corporate management about their company’s ability to generate profits—specifically, it implies that they expect to produce enough in earnings on a regular basis that they can share some of it with us. Now imagine what it means when a company builds a track record of growing those dividends each and every year.

However, as bullish as “the Street” might be about dividend growers as a whole, research firms clearly favor some dividend-growth stocks more than others … and those are the stocks we’re interested in talking about today.

Read on as I introduce you to some of the best dividend-growth stocks you can buy, as measured by consensus ratings across dozens of Wall Street analysts.

Editor’s Note: The tabular data presented in this article is up-to-date as of Sept. 23, 2026.

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Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

3 Reasons to Value Dividend Growth

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Let’s say you owned shares of the presently fictional Woodley Federated Holdings (WFH). If one day, WFH suddenly informed shareholders that it would be paying, say, a dollar per share per year from now on, we’d be pretty happy campers—after all, a dollar per year of returns we couldn’t really count on before.

But if Woodley Federated Holdings started paying us a dollar per share one year, then raised it every year after that, we’d be downright euphoric. Why? Well, I can think of three reasons:

1. A higher dividend over time means a higher “yield on cost” for us. Let’s say you bought a SFH share for $100. That $1-per-share annual dividend would equal a 1% yield on your purchase. If the stock price and dividend both doubled, to $200 per share and $2, respectively, new investors would still be buying at a 1% yield. But you? You’d be earning 2% on your original $100 purchase.
2. A higher dividend over time fends off inflation. In most years, you experience inflation, which is when the worth of our currency slightly declines. So $1 worth of groceries, gas, etc. this year will generally buy you slightly less groceries, gas, etc. next year. High inflation over the past few years really drives home this point—according to the U.S. Bureau of Labor Statistics, in May 2026, you would have needed $1.99 to buy what $1 could have bought in January 2020, right before the COVID pandemic hit a fever pitch. So if you receive $1 in dividends every year in perpetuity, your dividend income will lose its value over time. But if that initial $1 dividend is raised enough every year, your income could keep pace with (or even outrun) inflation.
3. A higher dividend can be a sign of quality. Just like initiating a dividend says “we have so much money that you can have some,” a track record of raising dividends typically signals a company’s ability to continue growing its bottom line.

Put simply: Regular dividend growth signals a higher caliber of operations (and thus potentially a higher caliber of stock), and it puts more money in our pockets. That’s a lot to love.

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Keep an Eye on Dividend Payout Ratios

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No matter what kind of dividend stock you’re looking at, you’ll want to consider its “dividend payout ratio,” or just “payout ratio.”

The dividend payout ratio—usually the percentage of profits is being used to pay the dividend (though some people prefer to use free cash flow instead) is a quick-and-dirty way for the average investor to get an idea of how sustainable a dividend is. It’s a simple calculation: dividends per share (DPS) / annual earnings per share (EPS) = dividend payout ratio.

I’ll use extreme examples to get the point across:

• Company A pays $1 per share in annual dividends and is expected to finish the year with $10 per share in earnings. $1 in DPS / $10 in EPS = 10% payout ratio.
• Company B pays $10 per share in annual dividends and is expected to finish the year with $10 per share in earnings. $10 in DPS / $10 in EPS = 100% payout ratio.

Which company do you think has a more sustainable dividend? 

While an earnings-based payout ratio isn’t a perfect metric (dividends are technically paid from cash flow, not profits, and certain types of companies use more specialized measures of profitability), it’s generally fair to assume Company A has a safer payout than Company B. If Company A’s earnings suddenly fall by half in a given year, it can still pay its dividend with plenty of room to spare. If Company B’s earnings suddenly fall by half, however, it will be paying out nearly twice what it’s bringing in.

You can use this same logic to make an educated assumption about a company’s ability to grow its dividends going forward. If Company A and Company B—two companies in the same sector with a similar business model—have payout ratios of, say, 10% and 80%, you could reason that Company A has more runway to grow its dividend.

To be clear: There’s no “exactitude” as it pertains to dividend payout ratios. But if you need a general guide? Depending on who you’re asking, anywhere between 30% and 60% is perfectly healthy with room to grow, below 30% implies miles of runway, between 60% and 80% might be sustainable but probably not much room to grow, and between 80% and 100% could be worrisome from dividend-growth and dividend-safety perspectives.

Related: 10 Best Dividend Mutual Funds You Can Buy Now

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Dividend-Growth Stocks That Wall Street Loves

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Here’s how I came up with today’s list of highly rated dividend-growth stocks.

I started with a “selection universe” of the 500 companies within the S&P 500 Index. Next, I included only companies with 10 or more years of uninterrupted annual dividend growth. (These companies are frequently referred to as “Dividend Achievers.”)

From there, I excluded any company with a consensus analyst rating (provided by S&P Global Market Intelligence) of Hold or below. S&P boils down consensus ratings down to a numerical system where …

• 1 to 1.5: Strong Buy
• 1.5 to 2.5: Buy
• 2.5 to 3.5: Hold
• 3.5 to 4.5: Sell
• 4.5 to 5: Strong Sell

In fact, every dividend-growth stock on this list has a rating of 2 or less, indicating that at worst they enjoy a very firm consensus Buy rating, if not an outright Strong Buy rating.

From there, I selected some of the highest-rated dividend stocks that qualified, but with a firm eye on creating a somewhat diversified list. Specifically, no sector is represented by more than two stocks.

Yield wasn’t even a consideration. Dividend growers often don’t have a high current yield—and if you’re taking the long view, they don’t necessarily need to. If a company yielding 1% today has a commitment to robust dividend growth, that same stock could yield 3%, 4%, or even more as the years roll by.

The stocks are listed below, in descending order of their consensus rating (from the “worst” rating to the best).

Best Dividend-Growth Stock #10: Eaton

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• Sector: Consumer staples
• Market cap: $170.0 billion
• Dividend yield: 1.0%
• Consensus analyst rating: 1.52 (Buy)

Eaton (ETN) is a Dublin, Ireland-domiciled but Beachwood, Ohio-headquartered power management company that operates across most of the world. Its offerings include electrical and industrial components, power distribution and assemblies, residential products, wiring devices, utility power distribution products, and more. Outside of its power portfolio, it offers everything from pumps and motors to transmissions and engine values to aircraft flap and slat systems. Its products power a wide variety of industries, not to mention vehicles and aircraft.

A number of trends are working in Eaton’s favor, including digitalization, energy transition, and electrification. And it also benefits from growth in infrastructure spending.

“The company has been experiencing strong orders and record backlogs that should position it well to deliver EPS [earnings per share] growth over the long term, driven by margin improvement, capacity expansion, and top-line growth,” Argus Research analyst Kristina Ruggeri writes. “Data centers, in particular, have been a high growth area for Eaton, with strong order growth and a backlog that spans 15 years.

Among other things, Eaton is an early mover in solid-state transformers, which are a core power-distribution technology for AI datacenters. It has also been making acquisitions to bolster its thermal management offerings.

“Management also expects solid growth in aerospace and utility end markets,” adds Ruggeri, who is among 23 analysts who see ETN stock as Buy-worthy. That number dwarfs the remaining three Holds and lone Sell.

Eaton has also managed to keep the pedal down on its dividend for the better part of two decades. In February 2026, it announced a roughly 6% increase to its cash distribution, to $1.10 per share marking 17 consecutive years of higher payouts. And it has paid dividends every year for more than a century.

That distribution is hardly making a dent in ETN’s bottom line, either. At current levels, the dividend represents less than a third of Wall Street’s expectations for 2026 adjusted earnings. 

Related: 8 Best High-Yield Dividend Stocks: The Pros’ Picks

Best Dividend-Growth Stock #9: Abbott Laboratories

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• Sector: Healthcare
• Market cap: $179.1 billion
• Dividend yield: 2.4%
• Consensus analyst rating: 1.52 (Buy)

Abbott Laboratories (ABT) is a large healthcare firm that develops, makes, and sells medical devices, diagnostic products, nutritional products, and generic pharmaceuticals. Among other things, it’s responsible for FreeStyle (and FreeStyle Libre) glucose monitors, Pedialyte hydration products, Similac formulas, PediaSure children’s nutritional products, and BinaxNow COVID-19 antigen tests.

It’s also the owner of Cologuard screening tests following the March 2026 closure of its acquisition of Exact Sciences.

Medical devices are Abbott’s biggest breadwinner at nearly half of revenues, and they’ve been a key driver of growth of late. The company has reported 13 consecutive quarters of double-digit top-line growth in medical devices; in the first quarter of 2026, it enjoyed a 14% year-over-year improvement in electrophysiology revenues and 11% growth in heart failure product sales.

Abbott has fallen into bear-market territory in 2026, with short-term headwinds including weakness in nutrition that might not wane until this year’s second half. But the company has been sharply rebounding over the past month, and the pros remain bullish, with ABT commanding 23 Buys against six Holds and no Sells.

“Our rating on Abbott Laboratories is Buy and underpinned by the company’s upbeat outlook,” says Argus Research analyst David Toung. “The company sees stronger topline growth in the second half of 2026, driven by cancer diagnostics, cardiovascular, and an improving Nutritional Products segment. Abbott plans three product launches in Cardiovascular as well as expanded reimbursement coverage for FreeStyle Libre.”

“We are optimistic on an organic growth recovery through ’26, as we see underlying growth drivers as intact to work back to a high-single-digit growth profile in 2027 and fewer headwinds plus increasing [Exact Sciences] contributions in 2027,” add Jefferies analysts, who also rate the stock at Buy. “We see ABT as a top-quality, well-run franchise and view the stock’s valuation as attractive. ABT is a show-me story but with a good set of businesses and pipeline that we think can recover with better execution.”

Abbott is not only a S&P 500 Dividend Aristocrat (S&P 500 companies that have raised their dividends for at least 25 consecutive years), but it’s a Dividend King (the same thing, but for at least half a century). Thanks to a 7% hike, to 63¢ per share, announced in December 2025, ABT noww boasts 54 years of uninterrupted dividend growth. The distribution itself dates back more than a century, to 1924.

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Need Help Picking Stocks? Consider These Top-Rated Services

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Best Dividend-Growth Stock #8: Cardinal Health

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• Sector: Healthcare
• Market cap: $51.2 billion
• Dividend yield: 0.9%
• Consensus analyst rating: 1.50 (Buy)

Cardinal Health (CAH) is an essential cog in the healthcare machine, providing both products and services to hospitals, healthcare systems, pharmacies, ambulatory surgery centers, physician offices, even home patients.

Just a small sample of its offerings include distributing branded, generic, and specialty pharmaceutical, medical supplies, over-the-counter healthcare products, and consumer products; pharmacy management services; Cardinal Health-manufactured and branded medical, surgical, and laboratory products; and supply chain services.

Cardinal shares rocketed higher in 2025, up 76% on a total-return basis (price plus dividends). It’s had more of a roller-coaster year in 2026, though shares are still in the green with high-single-digit gains. Among the drivers were its fiscal third-quarter earnings report, released in August.

“We would characterize the initial FY27 outlook and business update as consistent with recent outperformance,” says UBS analyst Kevin Caliendo (Buy). “Looking ahead, management continues to expect to grow Pharma modestly faster than the market, benefitting from [wholesaler acquisition cost] inflation and continued but moderating GLP-1 demand.”

The consensus is for more of the same; Caliendo is one of 15 Buys on the stock, in contrast to three Holds and no Sells.

Cardinal Health is another Aristocrat to crack our list of the best dividend-growth stocks right now. CAH extended its streak of payout increases to 30 years in May 2026, when it improved its cash distribution by 1% to 51.58¢ per share. Moreover, a low dividend payout ratio of just above 20% of 2026’s projected earnings means there’s plenty of headway for further increases.

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Best Dividend-Growth Stock #7: Equinix

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• Sector: Real estate
• Market cap: $107.6 billion
• Dividend yield: 1.8%
• Consensus analyst rating: 1.50 (Buy)

Equinix (EQIX) is a real estate play on numerous technological megatrends, including cloud computing, big data, and artificial intelligence.

EQIX is the largest global data center and colocation provider for enterprise networks. In other words, Equinix is responsible for the actual server rooms that house all the bits and bytes that power all the content and software we offload to “the cloud” without really considering where the cloud is.

Considering the fact that cloud-based software is now just the normal way of doing business, that creates a massive opportunity for Equinix as one of the largest specialized firms in the space. This digital infrastructure provider boasts more than half a million connections to more than 10,500 customers, with a global reach of 77 metro areas in 36 countries. Those numbers will surely grow, with the company currently working on 46 projects in 32 markets across 22 countries.

“Equinix [second-quarter] results and guidance revisions reflect strengthening demand for its platform that is showing up in stronger bookings, significantly faster RPO growth for its recurring retail revenues, and underlying margin improvement,” Citi analyst Michael Rollins says. “EQIX is continuing to see some early benefits from rising demand for AI inference and agentic workloads.”

Rollins represents one of 28 Buy-equivalent ratings on the stock, which compares well to just six Holds and no Sells.

As for the dividend growth? Equinix just clears the bar with 11 consecutive years of annual payout hikes. Including its 10% hike to $5.16 per share announced in Feburary 2026, the quarterly cash distribution has rocketed a cumulative 205% higher since EQIX started paying regular dividends in 2015.

By the way: EQIX is a real estate investment (REIT), which is a specially structured business that exists to empower the general public to invest in real estate. The upside? REITs must pay at least 90% of their taxable income to shareholders, which usually results in above-average yields. The downside? While many stocks’ dividends are usually “qualified” and thus taxed at more favorable long-term capital gains tax rates, REITs’ dividends (including Equinix’s) are generally non-qualified and thus taxed at less favorable ordinary income tax rates.

REITs are also different from a payout ratio perspective. REITs frequently use a non-GAAP (generally accepted accounting principles) metric called “funds from operations” (FFO) to express their profitability, and they’re typically a better gauge of dividend health than regular earnings. In EQIX’s case, it’s paying less than half of its estimated adjusted FFO (AFFO), which implies the dividend is plenty secure.

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Best Dividend-Growth Stock #6: Xcel Energy

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• Sector: Utilities
• Market cap: $44.1 billion
• Dividend yield: 3.3%
• Consensus analyst rating: 1.44 (Strong Buy)

Xcel Energy (XEL) is a regulated utility provider that serves 3.9 million electricity and 2.2 million natural gas customers across eight states, primarily in the Midwest. It generates electricity through natural gas, oil, wind, nuclear, hydroelectric, solar, and other energy sources. The company also develops and leases natural gas pipelines, as well as storage and compression facilities.

Like many utility companies, XEL has seen its fortunes improve alongside artificial intelligence (AI) companies’ ravenous demand to churn out power-hungry datacenters. But other drivers are powering Xcel ahead.

“Sitting in a favorable overlay of strong renewables resources, growing demand, and pragmatic regulation across most of the company’s Upper Midwest to Colorado/Texas footprint, XEL offers a ‘many ways to win’ dynamic with growth and upside drivers not narrowly tied to any one theme,” says Truist’s Richard Sunderland, who rates shares at Buy.

“We are favorable on nuclear generation, which can further save costs and receive favorable regulatory outcomes. In fact, recent favorable electricity regulatory increases have helped offset older decisions in which some customers paid rates tied to wholesale prices,” adds Argus Research analyst Marie Ferguson (Buy). “The company should expect to see stronger demographics as the economy improves and Denver remains a popular growth region. XEL is projected to see above-average growth in data center demand by 2028.”

Xcel also offers a stereotypically above-average dividend yield north of 3% right now, and Argus points out that “the company has grown its dividend faster than some peers,” too. That dividend reached 23 years of uninterrupted growth in February 2026, when XEL announced it would hike its payout by 4% to 59.25¢ per share. This amounts to less than 60% of its 2026 earnings estimates, which is generally comfortable, certainly for a utility company.

As far as the broader analyst set goes? Currently, 16 call XEL a Buy, versus one Hold and one Sell.

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Best Dividend-Growth Stock #5: Mastercard

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• Sector: Financials
• Market cap: $490.1 billion
• Dividend yield: 0.6%
• Consensus analyst rating: 1.43 (Strong Buy)

Mastercard (MA) is one of the world’s top payment card networks, spanning some 3.7 billion Mastercard credit and debit cards accepted at more than 110 million locations in over 210 countries and territories. It’s not just individual consumers who swipe with Mastercard, either—many businesses actually purchase from other businesses using Mastercard’s plastic.

But what’s interesting about Mastercard is that, despite making it possible for literally $10 trillion-plus worth of annual transactions to go through, the company isn’t really responsible for any of the underlying funds. Mastercard itself is not a bank—instead, thousands of banks and other financial institutions use the company’s technology to give its customers the ability to spend anywhere, anytime. So, if you use a Chase Mastercard, Chase Bank is taking on the financial risk; Mastercard is just the middleman between merchant and bank.

And it’s quite the middleman.

“We expect earnings to continue compounding at a mid-teens rate or better for the foreseeable future, supported by the company’s rapid pace of innovation,” says Alexander Yokum, analyst at independent research firm CFRA (Buy). “Value-added services represent the most compelling growth driver and should outpace overall company growth, as clients increasingly adopt MA’s technology offerings in cybersecurity and fraud prevention. Cross-border volumes remain a positive signal as well, proving resilient in the face of tariff headwinds and geopolitical uncertainty stemming from the Iran conflict.”

That’s just one of 36 Buy calls on Mastercard stock. The remaining four ratings on the stock are Holds.

Another reason why Mastercard is among the best dividend-growth stocks to buy right now? The card company has strung together 15 years of uninterrupted dividend hikes, delivering nearly 300% payout growth over that time. Its most recent hike was a substantial 14% boost to 87¢ per share, announced in late 2025 starting with the January dividend. That represents less than 20% of expected earnings for 2026, giving Mastercard the flexibility to keep upward pressure on the distribution.

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Best Dividend-Growth Stock #4: S&P Global

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• Sector: Financials
• Market cap: $119.8 billion
• Dividend yield: 1.0%
• Consensus analyst rating: 1.33 (Strong Buy)

S&P Global (SPGI)—parent of S&P Dow Jones Indices, which produces the S&P 500—is one of the highest-rated dividend-growth stocks on the market, and the highest-rated Dividend Aristocrat on our list.

The S&P 500, of course, is America’s most ubiquitous index—literally trillions of dollars worth of fund assets are either indexed to it or benchmarked against it. (And as I point out every year in my list of the best ETFs, active managers have a really hard time beating it.)

But S&P Global is more than just the S&P 500. It’s also responsible for the Dow Jones Industrial Average, the Dow Jones Transportation Index (the oldest index in use), and more than a million other indexes across a number of asset classes. It’s also home to …

• S&P Global Ratings: Credit ratings, research, and analytics
• S&P Global Commodity Insights: Information and benchmark prices for commodities and energy
• S&P Global Market Intelligence: A wide variety of financial markets and asset data and analytics, enterprise technology, and advisory services.

As I write this, SPGI also has a “global mobility” business—solutions for vehicle manufacturers, automotive suppliers, mobility service providers, and other companies in the automotive value chain. However, that business will be spun off into its own publicly traded company, Mobility Global (MBGL), on July 1, 2026.

SPGI is down by high teens in 2026, but not because of the spinoff. Instead, the stock has been dogged by AI disruption worries, but the analyst set thinks those worries are overblown.

“AI is not disrupting SPGI’s business—the overwhelming majority of the revenue is from SPGI proprietary data which is not available for models elsewhere,” say Stifel analysts, who rate shares at Buy. In fact, “with new AI tools, margin expansion could be above the medium term targets of 50 to 75 basis points per year over 3-5 years. SPGI is rolling AI out to its software developers (has 9K of them), data operations and data assembly engineers, researchers and analysts.”

Wall Street remains overwhelmingly bullish; 23 pros call it a Buy, versus one Hold and no Sells.

S&P Global is one of the best dividend-growth stocks in large part because of these varied and growing sets of businesses, which have allowed the firm to pay dividends every year since 1937, and grow them for 53 consecutive years. That puts SPGI in elite company as a Dividend King.

The financial firm’s latest improvement was a 1% uptick, to 97¢ per share, announced in January 2026. That’s less than 20% of the company’s expected annual profit this year, so S&P Global has plenty of resources to keep its streak alive going forward

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Best Dividend-Growth Stock #3: Microsoft

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• Sector: Technology
• Market cap: $3.7 trillion
• Dividend yield: 0.8%
• Consensus analyst rating: 1.33 (Strong Buy)

Microsoft (MSFT) is one of the most dominant names in technology and among the largest tech stocks on the planet. The average person knows Microsoft for its iconic Windows and Office productivity software for personal computers, as well as its Xbox gaming console and related software. But Microsoft also is a major player in cloud computing, via its still-growing Azure cloud services, and an emerging titan in artificial intelligence—a position it further cemented in 2025 with the announcement of a strategic partnership with Anthropic.

And finally, thanks to a strong end to its fiscal year announced in July, MSFT has dug itself out of its 2026 bear market.

“Management offered a bullish outlook that calls for acceleration in both the Azure and M365 Commercial Cloud businesses,” say William Blair analysts, who rate MSFT stock at Outperform. “Beyond the acceleration story, the key takeaway from the quarter, in our view, is that AI-driven momentum is showing up across both the infrastructure layer and the application layer, with Azure surpassing $100 billion in annual revenue, Microsoft Cloud growing 27%, and Microsoft 365 Copilot paid seats surpassing 30 million.”

Wall Street is no longer giving an automatic benefit of the doubt to artificial intelligence arms, and instead is becoming more scrutinizing of both opportunity and costs. Still, the pros continue to be optimistic about Microsoft’s role.

“The debate around near-term AI infrastructure margins, capital intensity, and ROI is likely to persist,” says Morgan Stanley’s Adam Wood (Overweight, equivalent of Buy). “But we remain confident in Microsoft’s ability to monetize this investment cycle and expand AI economics over time through higher capacity utilization, infrastructure, silicon, and model efficiencies, a richer mix of higher-value cloud and AI services, and broader Copilot and agent monetization across its installed base

MSFT is one of the tech sector’s most established dividend payers, boasting 20 consecutive years of growth. The latest one was announced in September 2026—a nearly 8% improvement to 97¢ per share that represents less than 20% of expectations for fiscal 2027 profits.

Microsoft is one of the Street’s most-loved dividend-growth stocks right now, too, at an incredible 53 Buy calls versus two Holds and no Sells.

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Best Dividend-Growth Stock #2: Smurfit Westrock

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• Sector: Consumer discretionary
• Market capitalization: $24.4 billion
• Dividend yield: 3.9%
• Consensus analyst rating: 1.29 (Strong Buy)

It’s one of the best value stocks right now. It’s one of the best growth stocks, too. So why not add another honorary by calling it one of the best dividend-growth stocks on the market?

Smurfit Westrock (SW)—the product of a 2024 merger of Ireland’s Smurfit Kappa and America’s Westrock—is a global manufacturer of consumer packaging, corrugated packaging, and a variety of paper products. And by virtue of that merger, the combined entity is now one of the largest packaging providers in the world, with operations in 40 countries.

Consider Smurfit Westrock an interesting beneficiary of technological trends—specifically, the continued rise of e-commerce. As people increasingly move away from buying in brick-and-mortar stores and toward online shopping … well, those products have to get shipped in something, and that’s precisely where Smurfit comes in.

“[We estimate] that the industry will remain strong, and we see modest expansion at a compound annual growth rate of 3%-4% through 2028,” writes Argus Research analyst Alexandra Yates, who is one of 15 analysts covering Smurfit, all of whom rate the stock at Buy. “We favor companies with pulp, paperboard packaging, and corrugated product lines, and expect this segment to show continued long-term growth through 2030.

“We see long-term upside potential and expect earnings growth congruent with growth in e-commerce and growth in demand for sustainable paper and packaging goods. We think that current valuation multiples are attractive given the company’s recovering earnings outlook through FY26.”

The company has only existed as Smurfit Westrock for a couple of years. However, both Smurfit and Westrock were dividend growers prior to the merger; applying Smurfit’s longer streak to the entire entity, the company boasts 14 consecutive years of dividend increases. Its most recent upgrade, announced in February 2026, was a 5% raise to 45.23¢ per share. That’s a fairly high 80% of the current year’s earnings estimates, but a far more comfortable 55% or so of Wall Street’s 2027 bottom-line prediction.

Related: The 10 Best Dividend ETFs for the Rest of 2026

Best Dividend-Growth Stock #1: Broadcom

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• Sector: Technology
• Market cap: $1.7 trillion
• Dividend yield: 0.7%
• Consensus analyst rating: 1.33 (Strong Buy)

Broadcom (AVGO) is one of the world’s largest semiconductor companies. It designs, develops, manufactures, and supplies semiconductor and infrastructure software products for a wide variety of uses, including (but hardly limited to) artificial intelligence (AI), data centers, networking, wireless, storage, and industrial automation.

The company has been an innovator in its own right, but you can also chalk up much of its scale to a history of aggressive merger-and-acquisition (M&A) activity. The company—itself the product of a 2016 merger between Broadcom Corporation and Avago Technologies (hence the AVGO ticker)—has swallowed up the likes of LSI Corporation, Brocade, CA Technologies, VMware, and Symantec’s enterprise security business.

Regardless of how it got there, the resulting entity is one of Wall Street’s most beloved chip stocks.

“We believe AVGO has one of the most strategic and financially attractive business models in the industry,” say Oppenheimer analysts, who rate the stock at Outperform. Among the reasons they love Broadcom are a “diversified revenues from enterprise, wireless, server/storage, and industrial,” “growth supported from steady high-margin infrastructure software,” and “one of the best gross margin, operating margin and free cash flow margin profiles, driven in part by its long record of successful accretive M&A.”

That bullishness for 2026 came despite a drop into bear-market territory in 2025 that has continued into the new year, prompted by the company’s warning about AI chip sales cutting into its gross profit margins. But shares have stabilized, and the pros remain unfazed.

“We have been somewhat surprised by AVGO’s underperformance YTD, particularly given the continued strength of the company’s AI growth trajectory,” say Morgan Stanley analysts, who rate the stock at Overweight. “We think there are a few reasons for the weakness, including investor preference for growthier ‘bottleneck’ stories across the AI semiconductor ecosystem, but the most persistent overhang remains the debate around MediaTek versus Broadcom share on Google TPU.

Like with many dividend stocks in the technology sector, Broadcom’s yield isn’t much to behold. But it’s a dividend-growth dynamo. The payout has doubled in just the past five years alone. In December 2025, AVGO hiked its dividend by 10%, to 65¢ per share, marking its 16th consecutive increase. And at less than a quarter of this year’s estimated profits, Broadcom has much more room to share.

Add 47 Buy calls against just three Holds and no Sells, and you have the very best dividend-growth stock to buy right now.

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What Is Dividend Yield?

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Perhaps the most important metric in the dividend universe is known as dividend yield. This is a simple financial ratio that tells you the percentage of a company’s share price that is paid out across a year’s worth of dividend distributions.

Expressed as a mathematical equation, it’s simply:

Dividend yield = annual dividend / price x 100

The idea here is to normalize dividend payments regardless of stock price, different quarterly payments, even different payment frequencies (quarterly is normal, but some dividend stocks pay monthly, while others pay semiannually or annually).

For instance, each of the following fictional stocks all have a dividend yield of 2.5%:

• Alpha Corp. currently trades for $40 a share. It pays a 25¢ quarterly dividend, for $1.00 per year in full. ($1 / $40 x 100 = 2.5%)
• Beta Inc. pays $1 in the first quarter, $2 in Q2, $3 in Q3 and $4 in Q4. That’s $10 in dividends for the full year. It trades for $400 a share. ($10 / $400 x 100 = 2.5%)
• Gamma Ltd. pays $2.50 just once per year. It trades for $100 a share. ($2.50 / $100 x 100 = 2.5%)

The idea is to focus on the percent of your initial investment you get back, and help you compare apples to apples.

Taking this math a step further, you learn that a company can suddenly feature a very high dividend yield through one of two very different ways: the share price falling very quickly, or the dividend growing very rapidly.

Alpha Corp., which trades for $40 per share, pays a 25¢ quarterly dividend that yields 2.5%. In a month, it yields 5.0%. Here are two ways that could have happened.

• Alpha Corp. doubled its dividend to 50¢ per share, for a full $2 per share across the year. The share price stays the same. ($2 / $40 x 100 = 5.0%)
• Alpha Corp. kept its dividend the same, but its share price plunged in half to $20 per share. ($1 / $20 x 100 = 5.0%)

Clearly, that 5% yield appears to be much safer and reliable in one scenario than the other.

What Is ‘Yield on Cost’?

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When you look up a stock’s information, the dividend yield listed is based on the most recent dividend and the current stock price.

That yield is often actually different than the one current shareholders enjoy. That yield is called “yield on cost,” which is the payout based on what you paid, at the moment you invested.

Let’s say you buy a stock at $100, and it pays $1 per share. It yields 1.0% when you buy it ($1 / $100 x 100 = 1.0%).

In a year, that stock has doubled to $200 per share, and it also doubled its dividend to $2 per share. If you look up its information, its dividend is still 1.0% ($2 / $200 x 100 = 1.0%).

That’s not your yield on cost, however. You’re still receiving that higher dividend of $2 per share. But your cost basis is still the original $100 you bought the share at. So now, your yield on cost has doubled, to 2.0% ($2 / $100 * 100 = 2.0%)!

Related: What Are the Average Retirement Savings By Age?

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