10 Exceptional Stocks With Double-Digit Dividend Raises

Key Concepts

• Dividend Growers: Stocks that have consistently increased their total per-share dividend payout by at least 10% annually for five consecutive calendar years.
• Economic Moat: A Morningstar term describing a company's ability to maintain competitive advantages (Narrow or Wide) to protect its market share and profitability.
• Uncertainty Rating: A measure of the predictability of a company’s future cash flows (Low or Medium required for this list).
• Fair Value Estimate: Morningstar’s assessment of a stock's intrinsic value, used to determine if a stock is undervalued (trading at a discount) or overvalued (trading at a premium).

1. Methodology for Selecting Dividend Growers

David Herrell, editor of the Morningstar dividend investor newsletter, utilizes a rigorous four-part screen applied to the 1,500 stocks covered by Morningstar analysts:

1. Dividend Growth: A minimum 10% increase in total per-share dividend payout for each of the past five calendar years.
2. Economic Moat: Must possess a "Narrow" or "Wide" moat rating.
3. Uncertainty Rating: Must have a "Low" or "Medium" uncertainty rating.
4. Yield: Must maintain a dividend yield of at least 1%.

Caveats: The list is limited to the Morningstar-covered universe. The 10% growth requirement is based on total dollars paid out per share, which can be affected by the timing of dividend raises rather than just the percentage increase of the dividend rate.

2. The 2026 Class of Dividend Growers

The list of qualifying stocks decreased from 13 last year to 10 this year.

• Returning Names (7): Accenture, Snap-on Tools, NextEra Energy, SBA Communications, Domino’s Pizza, Zoetis, and MSCI.
• Newcomers (3):
  • TJX: Returned to the list after recovering from a 74% dividend cut during the 2020 pandemic.
  • Intuit & Motorola Solutions: Both met the criteria previously but were excluded due to yields falling below 1%; they have since crossed the 1% threshold.
• Notable Exclusion: Broadcom met the 10% growth criteria but was excluded because significant price appreciation drove its yield below the 1% requirement.

3. The "Near Miss" List

This list includes stocks that failed one or two criteria (e.g., dividend growth below 10%, high uncertainty, or missing a moat rating) but still yield at least 1%.

• Notable Exclusions from the Main List: Monderly International, Elevance Health, Stifel Financial, UnitedHealth, and SS&C Technologies.
• Specific Case (UnitedHealth): Even if they had met the 10% growth target, they would have been disqualified due to Morningstar analysts increasing their uncertainty rating from "Medium" to "High."

4. Strategic Perspectives on Dividend Growth

• Quality Indicator: Dividend growth is viewed as a proxy for corporate quality. Because dividends are paid from earnings, consistent 10% growth suggests a company with robust, growing earnings.
• Defensive Element: These stocks often perform in the middle of the pack—outperforming the broad market during downturns and trailing during high-growth bull markets.
• Yield Paradox: High-yielding stocks (like utilities or pharmaceuticals) often struggle to make this list because they already pay out a large percentage of earnings, leaving little room for 10% annual growth.

5. Future Outlook and Valuation

• Sustainability: NextEra Energy, Snap-on, MSCI, and Motorola are on track for next year. However, Zoetis is likely to drop off due to a lower dividend increase (6%) for 2026. NextEra Energy management has signaled a shift toward 6% growth in future years, suggesting they may also exit the list soon.
• Undervalued Opportunities: While valuation was not a screen criterion, five stocks from the current list are trading at a discount of 10% or more to their fair value:
  • Zoetis: 32% discount
  • Accenture: 30% discount
  • Domino’s Pizza: 23% discount
  • Intuit: 19% discount
  • SBA Communications: 13% discount

Synthesis

The Morningstar "Dividend Growers" list serves as a high-quality filter for investors prioritizing consistent, double-digit dividend growth over immediate high yield. While the screen is restrictive, it identifies companies with strong competitive advantages and predictable cash flows. Investors should note that these stocks are not necessarily high-income plays but rather defensive, quality-oriented assets, with current opportunities found in names like Zoetis and Accenture, which are currently trading at significant discounts to their fair value.