There are plenty of reasons why many investors may choose to load up on dividend stocks right now. Companies that pay out dividends consistently, and grow their dividend distributions over time, signal to the market that they believe their future earnings growth prospects are likely to remain robust. It’s this stability that many are after, and could be valued much more highly if earnings deterioration starts to materialize in the market.

We’re not quite there yet, with earnings estimates for the coming year continuing to come in higher and higher. There are plenty of reasons why many experts and Wall Street analysts are constructive on the idea that this rally could have legs to continue from here.

However, I do think having a mix of growth stocks with the potential to outpace the overall market and some more defensive picks makes sense for most investors. Diversification is still important, no matter what the “all-in” investor bros tell you is the right way to go about building your portfolio.

So, for those looking to add some exposure to quality dividend growth stocks before the year ends, here are three top options that are worth a look.

Key Points About This Article:

• Companies that are able to deliver consistent earnings growth should be looked at more closely in this current environment.
• Here are three quality dividend growth stocks that look like solid buys before we turn the page to 2025.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Realty Income (O)

Realty Income (NYSE:O) is among the leading real estate investment trusts (REITs) investors can consider for consistent and stable monthly income. Over time, Realty Income has continued to grow its monthly distribution to shareholders, providing those who have continued to invest capital in this particular monthly dividend payer with more and more income each month. As rents rise, the REIT passes on these higher cash flows to investors, and hasn’t made any excuses during the difficult periods in the market, raising its monthly distributions through the GFC as well. 

The company’s portfolio includes world-class tenants, including restaurants and retailers, who lease the company’s properties via long-term contracts. And with more than 1,550 tenants, no single bankruptcy significantly impacted its performance in the past. As Realty Income’s portfolio grows, this diversification should provide increased benefits to investors looking for stable cash flow. The company’s top tenants include CVS, Walmart, and FedEx, with sale-leaseback deals unlocking capital for clients and securing high-quality properties. The REIT has delivered positive operational returns annually for 30 years, growing adjusted FFO per share in 27 of 28 years at a median 5% rate.

Moreover, the company maintained a solid 75% payout ratio, with dividends growing at a 4.3% annualized rate since inception. Thus, for those seeking reliable long-term dividend growth, this is a top stock I think is worth considering given that fact this stock is actually down more than 2% on the year at the time of writing. 

Pfizer (PFE)

With 344 consecutive quarterly payments, pharmaceutical giant Pfizer (NYSE:PFE) is certainly a stable dividend stock investors may want to look at during periods of decline. On a year-to-date basis, PFE stock is down more than 12%. And while that’s not great news for investors who bought this stock for capital appreciation, this has also meant the pharmaceutical giant’s dividend yield has surged to 6.6%. So, for those yield-hungry investors out there, this may be the time to start considering gobbling up shares of this blue-chip giant. 

Despite concerns over patent cliffs and regulatory challenges under a new U.S. administration, Pfizer’s history of innovation and strategic acquisitions (including its most recent Seagen for $43 billion) positions the company well for long-term growth. I’m of the view that Pfizer could have a pathway to growth and achieve the projected $25 billion in additional revenue target set by management (by 2023), if the company’s pipeline of new drugs and M&A trajectory continues.

Of course, it all depends on what price Pfizer pays for the companies and drugs it acquires along the way, and whether the company’s clinical trials pan out. There’s some risk here. But with recent quarterly earnings coming in better than expected ($1.06 of EPS beat the $0.64 estimate handily, and revenue rose 31.2% year-over-year to $17.7 billion), there’s a lot to like about the company’s potential to outperform from this relatively muted valuation multiple. 

Altria Group (MO)

Altria Group (NYSE:MO) is certainly among the most incredible dividend growth stocks investors can consider. That said, this company isn’t for everyone. The Marlboro cigarette maker produces an end product which many investors simply don’t want to touch, for a wide range of reasons. Thus, with a limited investor pool, and relatively muted demand across the board, this is a company that can trade at a steep valuation discount to other similar companies in different sectors.

It’s this relative valuation discount that leads to a relatively high dividend yield of 7.2%, one of the best-in-class yields of any consumer discretionary product provider. At less than 10-times earnings, it’s clear many experts believe this stock could see earnings deterioration over time, as consumer demand for cigarettes continues to wane around the world (as it should).

Altria is still the dominant player in the North American cigarette market. As of Q3 2024, the company held a 45.7% share in this profitable market, with Marlboro alone contributing 41.7% to this overall share number. It’s clear that the Marlboro brand remains the dominant consumer choice in the U.S. market, and until that changes, this is a company that should continue to spit off cash at an incredible rate.

The company is attempting to grow its smoke-free segment significantly, and we’ll have to see how this transition rolls out. But it’s true that the company’s deep pockets, and willingness to pass on excess earnings to cash flows, makes this stock an attractive pick for dividend investors right now.

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