6 Dividend Growth Stocks That Can Provide a Lifetime of Passive Income

Dividend stocks have long been a favorite for investors seeking reliable passive income. However, not all dividend-paying companies offer the same long-term investment potential. Smart investors look past the allure of a high current yield and focus on the traits that suggest a company can deliver consistent returns over the long haul.

So what should buy-and-hold investors look for in a dividend stock? Three key factors are essential. First, a conservative payout ratio of under 50% signals that the company isn’t overextending itself to maintain dividends. Second, there should be a proven track record of annual dividend increases spanning decades. And third, you should look for a strong economic moat that helps protect the company’s profitability.

While high yields might be tempting, they can often be a warning sign of potential dividend cuts. These cuts could lead to sharp declines in share prices and hurt returns for years to come. By prioritizing the sustainability and growth of dividends over immediate yield, investors can build a portfolio of steady, income-producing stocks that will stand the test of time.

Here’s a closer look at six dividend stalwarts that have mastered the art of growing shareholder payouts.

Target: A dividend powerhouse

With an impressive track record of 53 consecutive years of dividend increases, Target (TGT -1.80%) stands as a beacon of reliability for income-focused investors. The retail powerhouse is set to extend this streak to 54 years in 2025, offering shareholders a compelling 2.87% yield backed by a conservative 45.4% payout ratio. Over the prior 10-year period, Target has demonstrated its commitment to shareholder returns through a robust 8.86% annual dividend growth rate.

Beyond its dividend appeal, Target presents an attractive valuation proposition. Trading at a forward P/E ratio of 14.5 for 2025, the stock appears notably discounted compared to the S&P 500‘s multiple of 24. This valuation gap seems particularly intriguing given Target’s competitive advantages — a powerful brand presence, vast retail footprint, and sophisticated supply chain infrastructure — which collectively form a durable economic moat protecting its market position.

Parker-Hannifin: Engineering excellence meets dividend reliability

Parker-Hannifin (PH 0.45%) has a remarkable dividend history, with 68 consecutive years of increases. That puts it in an elite group that includes only four other companies in the S&P 500 with longer streaks.

While the current 0.98% yield might not turn heads, Parker-Hannifin’s dividend story becomes more compelling when examining the details. The company maintains a conservative 28% payout ratio, providing substantial room for future increases.

This financial discipline, combined with an impressive 11.9% 10-year annualized dividend growth rate, demonstrates management’s commitment to progressively rewarding shareholders.

Trading at 26.2 times forward earnings, Parker-Hannifin commands a premium valuation relative to the S&P 500. This premium reflects the company’s competitive strengths — a deep technological moat built on decades of innovation, a comprehensive product portfolio spanning multiple industries, and entrenched relationships with major equipment manufacturers.

W.W. Grainger: Distributing value through reliable dividends

W.W. Grainger (GWW -5.63%) has built a remarkable 53-year streak of consecutive dividend increases, cementing its position among the market’s most reliable dividend growers. The industrial distribution giant maintains a conservative 21.1% payout ratio, suggesting substantial capacity for future increases despite its modest 0.73% current yield. Grainger’s disciplined approach to shareholder returns is further evidenced by its steady 6.75% 10-year annualized dividend growth rate.

At 25.2 times forward earnings, Grainger trades at a slight premium to the S&P 500, a valuation that reflects its competitive advantages. The company’s economic moat stems from its vast distribution infrastructure, significant scale benefits, and deep-rooted customer relationships in an otherwise fragmented industrial supply market.

Tennant: Five decades of cleaning up with dividends

Tennant (TNC -1.70%) has methodically built a 53-year streak of consecutive dividend increases, establishing itself as a reliable income generator in the industrial sector. While its current 1.38% yield might appear modest, the cleaning solutions leader maintains a notably conservative 19.7% payout ratio, providing ample room for continued dividend growth. The company’s measured approach to shareholder returns is reflected in its steady 3.82% 10-year annualized dividend growth rate.

Trading at 13.1 times forward earnings, Tennant offers investors an attractive entry point at a significant discount to the S&P 500. This compelling valuation is particularly noteworthy, given the company’s competitive advantages, including its commitment to product innovation, established brand strength, and comprehensive global service infrastructure.

Walmart: A retail giant’s dividend dedication

Walmart (WMT -0.50%) stands among the market’s most reliable dividend payers, having increased its payout for 51 consecutive years. The retail titan is poised to extend this impressive streak later this month with its 52nd consecutive raise. While its current 0.99% yield appears modest, Walmart maintains a sustainable 41.4% payout ratio. The company’s measured 2.7% 10-year annualized dividend growth rate reflects its balanced approach to shareholder returns while investing in future growth.

At 35.5 times forward earnings, Walmart commands a notable premium to the S&P 500, a valuation that reflects its market dominance. The company’s competitive advantages stem from its unmatched scale, sophisticated supply chain infrastructure, and growing digital commerce presence.

S&P Global: Rating high on dividend reliability

S&P Global (SPGI -0.41%) rounds out our dividend growth examination with an impressive 52-year streak of consecutive increases. The financial intelligence leader offers investors a 0.74% yield while maintaining a conservative 32% payout ratio. With a robust 11.7% 10-year annualized dividend growth rate, the company shows significant capacity for future increases.

Trading at 30.5 times projected 2025 earnings, S&P Global is valued at a premium relative to the S&P 500. This premium reflects the company’s formidable competitive advantages, including its trusted market position, essential role in global financial markets, and substantial customer switching barriers.

Building a passive income portfolio

These six dividend stalwarts demonstrate the essential characteristics that signal sustainable payout growth: multidecade histories of consecutive increases, prudent payout ratios, and durable competitive advantages. While each company offers distinct investment merits, their strengths become more pronounced when thoughtfully combined.

A well-constructed dividend portfolio balances investments across multiple sectors and companies to minimize risk while optimizing both yield and growth potential. Given the portfolio overlap, investors might consider choosing either Target or Walmart rather than holding both big-box retailers.