3 Dividend Growth Stocks That Can Double Your Income

Many investors focus on the dividend yield, but not much on the dividend growth. This is a mistake, as dividend growth is a key factor that matters a lot in the long run. A dividend growth stock can significantly outperform a dividend stock that pays a static yield. If a 2% yield grows at a 10% CAGR over 10 years, it becomes 5.19%. Yield can then snowball more in future decades.

Also, stocks with dividend growth tend to have faster-growing businesses. You may immediately go for a tech stock like Microsoft (NASDAQ:MSFT), but I wouldn’t recommend that. The aim is to buy and hold these stocks for decades, and it is a big gamble to assume that tech companies will retain their dominance. The tech scene has changed drastically in the last 20 years; no one knows what may happen in the next 20 years.

Thus, it’s better to go for companies with more established roots and a history of growing their dividends and businesses faster than the market. Here are three to look into:

Aflac (AFL)

Aflac (NYSE:AFL) is a supplemental insurance company covering out-of-pocket costs that primary insurance companies don’t. The biggest plus is that Aflac gives you cash directly, meaning you decide where you get to spend the insurance money. Japan and the U.S. are two of Aflac’s biggest markets, and both are growing. 60% of revenue comes from Japan, where the insured population is highly loyal to the company.

Margins and buybacks are its strong suit. Aflac has reduced its outstanding share count from 918.8 million in 2013 to 549.96 million in 2024. The pace of buybacks has been even more aggressive in recent years as Aflac has made strides to increase its margins.

Investors are recognizing the strong execution here and are willing to pay more for it. AFL stock is up 185.75% over the past five years, and it gets you a 2.19% dividend yield for holding it. Aflac is six years from being a Dividend King, with 44 consecutive years of dividend increases on record. AFL’s dividends have grown by 17.39% over the past 12 months and at a 15% CAGR over 5 years.

Trane Technologies (TT)

Trane Technologies (NYSE:TT) is a heating, ventilation, and air conditioning company, and these companies have done exceedingly well in recent years. This company has a 150-year history, so there’s plenty of staying power here. The HVAC industry will continue to see strong tailwinds because these systems are the standard for new homes. New residences and commercial buildings also need recurring servicing, and Trane also benefits here. That’s not to mention harsher summers and winters, making HVAC essential.

This demand has led to TT stock surging by 252.87% over the past five years, with revenue increasing from $12.45 billion in 2020 to $19.84 billion in 2024. 2025 full-year revenue is estimated at $21.6 billion, up 8.86% year-over-year. The bottom line metrics are increasing even faster, expected to increase by 16.74% in 2025.

TT stock has a modest dividend yield of 0.89%. Dividends have grown 11.95% over the past 12 months and at a 10.92% CAGR over the past five years.

American Express (AXP)

American Express (NYSE:AXP) specializes in payment cards and has trounced Visa (NYSE:V) and Mastercard’s (NYSE:MA) gains. This company specifically targets individuals with high net worth, thereby giving it more pricing power. I expect the outperformance to continue over the coming decade, as Gen Z is more drawn to Amex.

AXP stock is up 218.89% over the past five years and has nearly doubled its revenue from 2020 to 2024 ($31.36 billion to $60.76 billion). Net income has more than tripled within that timeframe.

Interest rates will likely be cut more this year, which can cause pressure on American Express’ lending segment. A lower interest rate will also spur transactions by its customer base, which can partially offset the lending slowdown.

Nevertheless, the future is bright. AXP will be here to stay for decades into the future, perhaps rivaling Visa and Mastercard’s size. Gen Z Amex spending rose 40% year-over-year in Q2, a growth rate that is 4x higher than their Millennial counterparts!

AXP stock yields exactly 1% as of this writing. 1-year dividend growth is at 16.92%, with the 5-year CAGR at 12.06%.

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