10 best dividend growth stocks to buy now: Morningstar

Companies that pay dividends and also regularly increase them often represent attractive investments.

“Companies with growing dividends tend to be profitable and financially healthy — two valuable qualities during periods of economic slowdown,” wrote Morningstar investment specialist Susan Dziubinski. “That’s a scenario many market observers expect in 2024.”

In addition, “such companies are more likely to have competitive advantages that may allow them to pass along price increases and thereby maintain profit margins during inflationary times,” she said.

Also, “dividend-growth stocks tend to be less volatile than the overall stock market and are therefore attractive investments for playing a little defense.”

Dziubinski put together a list of 10 cheap dividend-growth stocks to buy. They are companies that

• have lifted their dividend payments over the past five years,
• pay out no more than 75% of their earnings in the form of dividends,
• possess durable competitive advantages, as measured by Morningstar’s moat ratings,
• and were trading among the widest discounts to Morningstar’s fair value estimates as of Nov. 24.

Morningstar Top 10 dividend-growth stocks now

Albemarle  (ALB) - Get Free Report, the world’s largest lithium producer

Morningstar moat rating: narrow. Morningstar fair value estimate: $300. Friday price quote: $124.55. Forward dividend yield: 1.32%.

Baxter International  (BAX) - Get Free Report, the medical-supplies provider

Morningstar moat rating: narrow. Morningstar fair value estimate $67. Friday price quote: $36.60. Forward dividend yield: 3.22%.

Lithia Motors  (LAD) - Get Free Report, a used-car retailer

Morningstar moat rating: narrow. Morningstar fair value estimate $500. Friday price quote: $274.40. Forward dividend yield: 0.75%.

Polaris  (PII) - Get Free Report, the recreational-vehicle maker

Morningstar moat rating: wide. Morningstar fair value estimate: $160. Friday price quote: $85.95. Forward dividend yield: 3.15%.

Discover Financial Services  (DFS) - Get Free Report, the credit-card company

Morningstar moat rating: narrow. Morningstar fair value estimate: $152. Friday price quote: $94.85. Forward dividend yield: 2.90%.

ResMed  (RMD) - Get Free Report, one of the world’s biggest respiratory-care-device companies

Morningstar moat rating: narrow. Morningstar fair value estimate: $258. Friday price quote: $158.90. Forward dividend yield: 1.22%.

Comerica  (CMA) - Get Free Report, the regional bank

Morningstar moat rating: narrow. Morningstar fair value estimate: $73. Friday price quote: $48. Forward dividend yield: 6.28%.

Estee Lauder  (EL) - Get Free Report, the cosmetics company

Morningstar moat rating: wide. Morningstar fair value estimate: $200. Friday price quote: $131.80. Forward dividend yield: 2.07%.

Pfizer  (PFE) - Get Free Report, the drug giant

Morningstar moat rating: wide. Morningstar fair value estimate: $48. Friday price quote: $29.05.

Forward dividend yield: 5.38%.

Eastman Chemical  (EMN) - Get Free Report, the chemical maker

Morningstar moat rating: narrow. Morningstar fair value estimate: $125. Friday price quote $85.20. Forward dividend yield: 3.77%.