S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
How this AP photographer captured a unique splash at the swimming worlds with an underwater camera
The perfect AI stock under $10 (Ad)
Delays in promised Western military aid to Ukraine are costing lives, the defense minister says
Corruption scandals cast a shadow over Portugal’s early general election and may favor populists
Laser breakthrough could send stock soaring 2,467% (Ad)
Tax-free status of movie, music and games traded online is on table as WTO nations meet in Abu Dhabi
MILAN FASHION PHOTOS: Feben, Rave Review promote looks for women of all shapes, ages and sizes
Laser breakthrough could send stock soaring 2,467% (Ad)
Caribbean leaders meet with Haiti's prime minister. Foreign force deployment is on the agenda
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
How this AP photographer captured a unique splash at the swimming worlds with an underwater camera
The perfect AI stock under $10 (Ad)
Delays in promised Western military aid to Ukraine are costing lives, the defense minister says
Corruption scandals cast a shadow over Portugal’s early general election and may favor populists
Laser breakthrough could send stock soaring 2,467% (Ad)
Tax-free status of movie, music and games traded online is on table as WTO nations meet in Abu Dhabi
MILAN FASHION PHOTOS: Feben, Rave Review promote looks for women of all shapes, ages and sizes
Laser breakthrough could send stock soaring 2,467% (Ad)
Caribbean leaders meet with Haiti's prime minister. Foreign force deployment is on the agenda
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
How this AP photographer captured a unique splash at the swimming worlds with an underwater camera
The perfect AI stock under $10 (Ad)
Delays in promised Western military aid to Ukraine are costing lives, the defense minister says
Corruption scandals cast a shadow over Portugal’s early general election and may favor populists
Laser breakthrough could send stock soaring 2,467% (Ad)
Tax-free status of movie, music and games traded online is on table as WTO nations meet in Abu Dhabi
MILAN FASHION PHOTOS: Feben, Rave Review promote looks for women of all shapes, ages and sizes
Laser breakthrough could send stock soaring 2,467% (Ad)
Caribbean leaders meet with Haiti's prime minister. Foreign force deployment is on the agenda
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
How this AP photographer captured a unique splash at the swimming worlds with an underwater camera
The perfect AI stock under $10 (Ad)
Delays in promised Western military aid to Ukraine are costing lives, the defense minister says
Corruption scandals cast a shadow over Portugal’s early general election and may favor populists
Laser breakthrough could send stock soaring 2,467% (Ad)
Tax-free status of movie, music and games traded online is on table as WTO nations meet in Abu Dhabi
MILAN FASHION PHOTOS: Feben, Rave Review promote looks for women of all shapes, ages and sizes
Laser breakthrough could send stock soaring 2,467% (Ad)
Caribbean leaders meet with Haiti's prime minister. Foreign force deployment is on the agenda
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high

These Quality Dividend Kings Grow their Dividends the Fastest

Dividend Kings

Key Points

  • Lowe's grows its dividend the fastest and can sustain double-digit increases for the next few years. 
  • Nordson ramped the pace of its distribution increases to a double-digit figure. 
  • Target is emerging as a deep-value opportunity for Dividend King investors looking for aggressive distribution growth. 
  • 5 stocks we like better than Lowe's Companies

Dividend growth is critical for high-quality buy-and-hold stocks. Dividends attract buy-and-hold investors, but the distribution growth keeps them there. That’s important because it can help lower volatility and beta. Dividend Kings are among the highest-quality dividend-growth stocks with 50 or more years of consecutive increases, but the growth isn’t always robust. Many Dividend Kings, most for that matter, tend to grow their payments at low-single-digit paces because they are already paying out most of their earnings as distributions. 

The good news is that not all Dividend Kings fall into the same category. Some are growing their payments at a double-digit pace, and that’s what we’re focusing on now—Dividend Kings with the fastest pace of distribution growth and the ability to maintain high distribution CAGRs. That’s an important metric because it means above-average returns for investors and a catalyst for higher share prices. 

Lowe’s is Growing its Dividend Faster than Any Other King

Lowe’s NYSE: LOW could now be the most attractive Dividend King. The company is paying 1.90% in yield while trading at a value compared to peers, and it comes with a robust outlook for distribution growth. The company has been increasing the payment for more than 50 years and is paying out less than 40% of its earnings. That low payout ratio is surprising for a stock with such a long history of sustained increases and has allowed the company to increase the pace of increases in recent years. 

Lowe’s is running a 20%+ CAGR over the past 5 and 3-year periods. Investors should expect this pace to slow over the next few years, but double-digit increases are still expected. Regarding competitor Home Depot NYSE: HD, it pays a slightly higher yield but trades at a higher valuation and comes with a less robust history and outlook for distribution increases. Home Depot's business is also underperforming Lowe’s in 2023. Analysis rate Lowe’s a Hold, but there have been recent upgrades, and the price target is trending higher. 

Lowes Stock Chart

Nordson Ups the Pace of Increases 

Nordson NYSE: NDSN is another Dividend King that can ramp the pace of its distribution increases. The company manufactures technology for dispensing and applying fluids in 3 segments. Those include industrial, medical, and advanced technology solutions, which gives the company ample diversification. Revenue and earnings growth have stalled in 2023 but remain solid and are stabilized above 2019 levels. 

The only downside is that the 16% dividend CAGR is pricey at 27X earnings, and the dividend yield is below the S&P 500 average. The upshot is the low 30% payout ratio and low leverage ratio, suggesting another 60 years of sustained increases are possible. Analysts rate NDSN stock a Moderate Buy with a firm price target about 8% above the recent action. 

Nordson stock chart

Target Becomes a Deep Value Play 

Target NYSE: TGT shares moved to a new long-term low following the Q2 results, opening a value play in the stock. The company’s P/E fell to only 16X, and the yield is increasing. The stock yields about 3.5%, trading at the new lows, and the payout is still reliably safe. The new guidance has the payout ratio in the range of 60%, which is on the high side but still manageable. 


The payout ratio will fall substantially if the company can effect its turnaround and meet next year’s consensus figure. Until then, the company has been increasing its payout at an 11.6% CAGR over the last 5 years. That pace may slow, but annual increases are still expected. Share prices may trend lower soon, but the analysts have been lowering their targets for Q3 results. This has set the bar low and may provide a catalyst in mid-November. 

The analysts' activity is weighing on Target share prices now but may also provide a catalyst in November or early next year. The group is lowering price target estimates, and there have been a few downgrades, but the rating is still a firm Hold with a consensus of 25% above recent action. 

Target Stock Price chart

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Should you invest $1,000 in Lowe's Companies right now?

Before you consider Lowe's Companies, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Lowe's Companies wasn't on the list.

While Lowe's Companies currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

13 Stocks Institutional Investors Won't Stop Buying Cover

Which stocks are major institutional investors including hedge funds and endowments buying in today's market? Click the link below and we'll send you MarketBeat's list of thirteen stocks that institutional investors are buying up as quickly as they can.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Target (TGT)
4.8273 of 5 stars
$151.48+0.8%2.90%19.32Hold$155.31
Nordson (NDSN)
4.0442 of 5 stars
$273.71+0.1%0.99%32.01Moderate Buy$263.00
Home Depot (HD)
4.4318 of 5 stars
$371.96+0.2%2.25%24.63Moderate Buy$360.46
Lowe's Companies (LOW)
4.298 of 5 stars
$232.56+0.9%1.89%17.93Hold$241.54
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


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