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Top 3 Dividend Growth Stocks for 2021

As 2020 starts, I like to look ahead and think about my top 3 dividend growth stock picks for the New Year, 2021. This year I am picking Dollar General (DG), International Business Machines (IBM), and Lockheed Martin (LMT). But before I proceed, let’s first take a look at how I did from my last year’s picks.

Top 3 Dividend Growth Stocks for 2021
Top 3 Dividend Growth Stocks for 2021

How Did I Do Last Year?

Last year I picked MSC Industrial Direct (MSM), Dollar General, and 3M Company (MMM) as my 3 Dividend Growth Stocks for 2020. You can see in the chart below that MSC Industrial was up +25.2%, Dollar General was up +35.9%, and 3M was up +2.8%. This is not too bad in absolute terms except for 3M. If you took advantage of the bear market in March and April and did some buying your returns would be higher.

MSC Industrial’s stock price trended down from the beginning of the year. The company was then impacted by COVID-19, low oil prices, and shutdowns in many industries and manufacturing businesses. The stock bottomed at $43.31 in late March. The stock price has recovered and then some on the strength of higher oil prices, recovery in manufacturing, and a yield that was approximately 6%. Additionally, the company seems to be focusing on higher cash flow and profitability by 2023. It is likely this strategy and outlook drove the late-year surge in the stock price.

Dollar General was up over 45% in 2019 and another 35% in 2020. The stock is performing well as the company is able to consistently generate positive sales growth and is expanding store count across the U.S. The retailer was already performing well before the pandemic, and the pandemic provided a tailwind for Dollar General. The company beat estimates every quarter this year and added to its share buybacks.

This is the second year that 3M was on my list and it has disappointed in both 2019 and 2020…

Please read the complete article at my profile in Seeking Alpha. To read about the Top 3 Dividend Growth Stock for 2021.

Disclosure: I am long MSM, DG, MMM, IBM, LMT


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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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