7 Dividend Growth Stocks to Watch in 2021. One of the most important things that you have to remember if you are someone who regularly partakes in investing, is that the market is in a constant state of fluctuation, and you always have to keep up with the trends.
What was going on last year with the stock market is very different from what’s happening right now. Market and economic conditions have changed, especially as the COVID-19 pandemic is subsiding as vaccinations rates rise. Some businesses are now struggling when it comes to their shares and stock prices, and some have skyrocketed. The technology sector led in 2020 but the sector is the laggard in 2021, while the energy sector trailed in 2020, the sector is leading 2021.
If you are primarily interested in dividend growth stocks, perhaps not the most exciting but definitely a very reliable way to actually earn money on the stock market, then this is still true despite dividend growth stocks typically having a reputation for being more stable.
The goal should be to maximize your passive income as much as possible, and the only way to do that is to know which dividend growth stocks are likely to keep growing in 2021 and possibly beyond. There are some which are pretty obvious contenders, but let’s have a look at a few which you might not have thought of that may do well this year:
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7 Dividend Growth Stocks to Watch in 2021
1. NextEra Energy (NEE)
The current dividend yield offered by NextEra Energy (NEE) is 1.7%. This is a company which has two main businesses, the first of which is Florida Power & Light, which is a major electric utility in Florida.
And then there’s also NextEra Energy Resources, which is focused on power generation with wind and solar energy. NextEra Energy is one of the companies whose primary focus right now is renewable sources of energy, which is a big reason why they are likely to grow in 2021.
With the Biden administration now settled into the federal government, one thing that the new President wishes to focus on is renewable energy and he is trying to put a lot of money into infrastructure which supports that.
The company’s stock has already started to rise due to this and NextEra Energy is notoriously generous in the past with the dividend with a 5-year growth rate of 12.1% and 10-year growth rate of 10.8%, so they are definitely a company to watch.
2. Clorox (CLX)
Clorox (CLX) currently has a dividend yield of 2.3%. You will probably be familiar with this company that is well known for their variety of cleaning products, which include bleach, disinfectant and sanitizer.
For a while, Clorox was a company whose needle wasn’t really moving all that much for revenue. The company has never really been in any kind of trouble, but things were stable and not moving higher. In spite of this, they were increasing their dividend payout every year since 1977 making the stock a Dividend Aristocrat.
Over the last year, the world was afflicted with COVID-19, and we found ourselves in a global pandemic. This caused widespread economic pain, but it also led to an increase in the demand for things like sanitizer and disinfectant, which resulted in Clorox becoming much more profitable.
Though the pandemic appears to be coming to subsiding, Clorox’s revenue and earnings should remain strong in 2021 as people remain more aware of the need for hygiene.
3. Sysco (SYY)
Sysco (SYY) has a dividend yield of 2.1%. The company specializes in restaurant supplies, and it should come as no surprise that the effects of the pandemic on Sysco were drastically different to the effects on Clorox.
The entirety of the restaurant industry suffered greatly in 2020, with many restaurants going out of business. As a result, Sysco’s stock did fall quite a bit and was down by more than half at the market bottom. But as we mentioned previously, the pandemic is seemingly subsiding.
Sysco did manage to avoid cutting or suspending its dividend and losing its Dividend King status. The company is now well-positioned for a comeback and growth over the next several months as restaurants start opening up more fully. Investing in Sysco right now may lead to decent returns, as their dividend payout will likely increase.
4. Aflac (AFL)
Aflac (AFL) is currently paying a dividend yield of 2.9%. An insurance company, Aflac focuses on life insurance, short-term disability and work-related accidents. Much like Sysco, this is another area that was affected negatively by the COVID-19 pandemic and is now set to make a comeback.
Notoriously generous with its dividend, Aflac increased the payout significantly by 17.9% in the first quarter of 2021 and this is the 39th consecutive year which they have done so. Aflac is also a Dividend Aristocrat. Investing right now, just before things start to improve for insurance may be a decent course of action.
5. Automatic Data Processing (ADP)
Automatic Data Processing’s (ADP) dividend yield stands at 2.2%. ADP is another Dividend Aristocrat. You’llprobably already have noticed a bit of a trend here. A lot of the factors contributing to the growth of the companies on this list are centered around the effects of COVID-19, and this one is no different.
ADP is one of the world’s largest payroll processing firms, with over 810,000 clients worldwide. The company suffered in 2020 amid high unemployment, but the economy will start to see a boost, hopefully a larger one than was expected now that subsequent federal stimulus was passed and dormant parts of the economy are reopening.
ADP has remained strong due to their reliability as well as a commitment to innovate payroll processes and so when the need for services such as this one becomes greater again, clients will continue to engage with ADP.
6. Hormel Foods (HRL)
Hormel (HRL) offers a dividend yield of 2.0%. While the restaurant industry may have suffered a lot, food in general has remained steady. In fact, packaged food such as what is sold by Hormel probably saw an increase with people eating at home more often.
Dividend payouts have always been something that is important to Hormel, and they are proud of the fact that their status as a dividend stock has been uninterrupted, dating all the way back to 1928. In addition, Hormel has paid a growing dividend for 55 consecutive years making the stock a Dividend King.
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7. Kimberly Clark (KMB)
Kimberly Clark (KMB) pays a dividend yield of 3.5%. It should come as no surprise that a company such as Kimberly Clark is and always has been extremely generous with their dividends, seeing as how important their products are to consumers. Kimberly Clark is also a Dividend Aristocrat.
The well-known brands under Kimberly Clark include Huggies diapers, Scott paper towels and Kleenex tissues. These are all very important consumer products that aren’t going away any time soon.
This is one of those stocks that you can almost always rely on for its dividend, so while some of the others on the list may be a little more risky, you can feel confident with the dividend growth prospects of Kimberly Clark.
Final Thoughts on 7 Dividend Growth Stocks to Watch in 2021
The great thing about experimenting with your choices when looking for dividend growth stocks is that you are always going to receive income and most likely annual dividend growth. But if you do some research and make some wise choices from the perspective of valuation, you may receive solid long-term returns through the combination of dividend growth and appreciation.
If you want to read another article by Sure Dividend, please take a look at Verizon: Blue Chip Stock for Reliable Dividends.
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Ben Reynolds founded Sure Dividend in 2014. Reynolds has long held a passion for business in general and investing in particular. He graduated Summa Cum Laude with a bachelor’s degree in Finance and a minor in Chinese studies from The University of Houston. In his spare time, Reynolds enjoys watching movies, reading, exercising, and relaxing with his wife, author Shina Reynolds.