2 Phenomenal Dividend Growth Stocks That Insiders Are Buying Hand Over Fist

Compounding Wealth

Dividend growth investing is a time-tested strategy that combines the stability of regular income with the potential for capital appreciation. By focusing on companies that consistently increase their dividends, investors can harness the power of compounding returns while aligning with businesses that demonstrate financial strength and confidence in future growth. 

Unlike speculative investments, dividend growth stocks often belong to mature, profitable companies with resilient business models, offering a buffer against market volatility. This approach not only provides a growing income stream but also signals management’s commitment to shareholder value, making it a superior choice for long-term wealth creation. 

When insiders — executives and directors with intimate knowledge of their company’s prospects — start buying stock, it’s a powerful signal. We’re not talking about stock option grants; rather these are open market purchases. As legendary investor Peter Lynch noted, insiders tend to buy for only one reason: they believe the stock price will rise. 

While the S&P 500 is surging to new highs, two dividend growth stocks have recently declined, yet insiders are aggressively purchasing shares, suggesting confidence in a rebound.

Enterprise Products Partners (EPD)

Enterprise Products Partners (NYSE:EPD), a leading midstream energy company, has long been a favorite among dividend growth investors. With a robust network of pipelines, storage, and processing facilities, EPD generates stable cash flows, supporting its impressive 26-year streak of dividend increases. 

The current yield of 6.8% is particularly attractive for income-focused investors. Notably, insider buying has resumed after a year-long hiatus, with directors purchasing nearly $1 million worth of shares while the stock trades about 10% below its recent highs. 

This decline, driven by broader energy sector headwinds, appears to have created a buying opportunity for insiders who see the stock as undervalued. EPD’s predictable fee-based revenue model, coupled with its investment-grade balance sheet, positions it well for sustained dividend growth. 

For investors seeking reliable income and potential price recovery, EPD’s insider activity and strong fundamentals make it a compelling choice.

Eli Lilly (LLY)

Pharmaceutical giant Eli Lilly (NYSE:LLY) has also caught the attention of dividend growth investors, despite a recent 27% drop from its peak. The decline followed an earnings miss and disappointing clinical trial results for its drug orforglipron, a pill formulation for weight loss, which tempered expectations for its blockbuster potential. 

However, insiders have responded by purchasing over $4 million in stock since the beginning of the month, including over $1 million by president and CEO David Ricks and nearly $500,000 by the CFO — a particularly bullish signal. Research suggests CFO stock purchases are more predictive of positive earnings surprises than CEO buys, as CFOs have deep insight into a company’s financial health. 

Key Takeaways

Both EPD and LLY offer unique opportunities for dividend growth investors. EPD’s high yield and stable cash flows appeal to those prioritizing income, while LLY’s innovation and insider confidence point to significant upside potential. 

The recent insider buying, especially amid stock price declines, signals that those closest to these companies see value where the market does not. As the broader market hits record highs, these stocks stand out as undervalued gems for patient investors.

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