Top UK Dividend Growth Stocks for 2024 Are Revealed

In the face of economic uncertainties projected for 2024, investors are turning to the reliability of dividend-growth stocks as a stable and profitable investment strategy. Morningstar, a leading research firm, has identified the top 10 UK dividend growth stocks that not only pay dividends but also, on every occasion, raise them, making them resilient choices for overcoming market movements.

According to Morningstar investment specialist Susan Dziubinski, “Companies with growing dividends tend to be profitable and financially healthy — two valuable qualities during periods of economic slowdown.” As anticipation of economic challenges looms in 2024, such companies are poised to weather the storm and potentially thrive.

Morningstar’s selection criteria for these dividend-growth stocks are strict, focusing on companies that have increased their dividend payments over the past five years, pay out no more than 75% of their earnings as dividends, and possess durable competitive advantages, as measured by Morningstar’s moat ratings. Additionally, the selected stocks were trading among the most comprehensive discounts to Morningstar’s fair value estimates as of November 24.

Here are Morningstar’s top 10 UK dividend-growth stocks for 2024:

1. Albemarle (ALB): The world’s largest lithium producer with a narrow moat rating, fair value estimate of $300, and a forward dividend yield of 1.32%.
2. Baxter International (BAX): A medical supplies provider with a narrow moat rating, fair value estimate of $67, and a forward dividend yield of 3.22%.
3. Lithia Motors (LAD): A used-car retailer with a narrow moat rating, fair value estimate of $500, and a forward dividend yield of 0.75%.
4. Polaris (PII): A recreational vehicle maker with a wide moat rating, fair value estimate of $160, and a forward dividend yield of 3.15%.
5. Discover Financial Services (DFS): A credit card company with a narrow moat rating, fair value estimate of $152, and a forward dividend yield of 2.90%.
6. ResMed (RMD): One of the world’s biggest respiratory-care-device companies with a narrow moat rating, fair value estimate of $258, and a forward dividend yield of 1.22%.
7. Comerica (CMA): A regional bank with a narrow moat rating, a fair value estimate of $73, and an impressive forward dividend yield of 6.28%.
8. Estee Lauder (EL): The cosmetics company with a wide moat rating, fair value estimate of $200, and a forward dividend yield of 2.07%.
9. Pfizer (PFE): The drug giant with a wide moat rating, fair value estimate of $48, and a forward dividend yield of 5.38%.
10. Eastman Chemical (EMN): The chemical maker with a narrow moat rating, fair value estimate of $125, and a forward dividend yield of 3.77%.

Investors looking for resilience and expansion in their portfolios amid economic uncertainties may find these dividend-growth stocks to be valuable additions. As the market drives up for potential challenges in the coming year, these stocks present an opportunity for investors to implement defensive tactics while maintaining the potential for attractive returns.