3 Dividend Growth Stocks That Raise Their Payouts at Higher Rates Than Inflation

As inflation continues to impact our daily lives, investors are looking for ways to protect their purchasing power. One strategy is to invest in dividend growth stocks that raise their payouts at higher rates than inflation. These companies not only provide a steady income stream but also help maintain the value of that income over time. In this article, we'll explore three dividend growth stocks that have consistently raised their payouts at higher rates than inflation: UnitedHealth Group, Broadcom, and Costco Wholesale.



1. UnitedHealth Group (UNH)
UnitedHealth Group is a leading health insurance giant that has consistently increased its dividend over the past decade. With a current yield of 1.6%, UNH's dividend growth rate has averaged around 19% annually, significantly outpacing inflation. The company's strong business performance, driven by an increasing number of people using its health insurance and expansion through acquisitions, has enabled it to maintain a low payout ratio (52%) and continue making generous increases in its dividend.



2. Broadcom (AVGO)
Broadcom, a semiconductor company, has also demonstrated a strong commitment to dividend growth. With a current yield of 1.2%, Broadcom has increased its dividend by nearly 1,600% over the past decade, averaging an annual increase of 33%. Although the most recent increase was 11%, it's still a testament to the company's focus on dividend growth. Broadcom's plentiful growth opportunities in the semiconductor space, driven by artificial intelligence and hyperscalers investing heavily in their operations, make it probable that this trend will continue.



3. Costco Wholesale (COST)
Costco Wholesale, a big-box retailer, has consistently grown its sales and profits, enabling it to increase its dividend at a solid pace. With a current yield of 0.5%, COST has increased its quarterly per-share dividend by 227% since late 2014, averaging an annual increase of a little under 13%. Additionally, Costco has occasionally rewarded shareholders with special dividend payments, such as the $15 per share payment in January 2024.



In conclusion, investing in dividend growth stocks that raise their payouts at higher rates than inflation can help protect your purchasing power and provide a steady income stream. UnitedHealth Group, Broadcom, and Costco Wholesale are three examples of companies that have consistently demonstrated a strong commitment to increasing their dividends, outpacing inflation, and providing value to their shareholders. By considering these metrics and staying informed about the companies' performance, investors can make well-informed decisions and build a portfolio that can weather the challenges of inflation.