3 Dividend Growth Stocks to Buy and Hold for the Next 20 Years

The stock market has been very kind to most investors in the past few months, but things may change soon as interest rate cuts come and the cycle shifts. You shouldn’t get fully engrossed in the winners of the current cycle. Instead, keep some exposure to dividend growth stocks and cash-rich companies. Once the pendulum eventually turns, these stocks will act as ballast and hold things together.

Dividend growth stocks pay you regular dividends, and they increase those dividends consistently. The growth of these dividends is often much higher than the dividend growth you get in the broader market.

In any case, dividend growth stocks do more than merely act as a defensive play. They have solid long-term compounding potential. It is much more likely that the company paying growing dividends will get you faster capital returns, too.

Here are three such dividend growth stocks to look into.

EOG Resources (EOG)

EOG Resources (NYSE:EOG) is an energy company that sells crude oil and natural gas. It also explores for hydrocarbons and is directly exposed to oil and gas prices. The financials are very healthy, with a free cash flow margin of almost 20%, and it also has more cash than debt.

Oil and gas may seem like a risky bet at first, but things are looking rosier for them. The current administration is friendly to energy-producing companies, and the clean energy movement lost significant momentum post-2022.

Europe has since been getting increasingly reliant on the U.S. for its energy needs. Russia is no longer a reliable source for them, nor is the Middle East, due to instability in the Red Sea. More recently, the secondary sanctions on India for buying Russian energy have also discouraged countries from doing the same.

All of these would-be customers of Russian and Middle Eastern oil and gas are now looking towards the U.S. It’s a win-win for most countries, as not only does importing oil from the U.S. cut down the trade deficit and give them leverage in tariff talks, but it is now competitive price-wise.

U.S. oil output rose to a record high in May, and exports are surging. The E.U. has pledged to import $750 billion worth of U.S. energy products over the next three years.

With all that in mind, I’m confident EOG stock can keep delivering. It comes with a 3.49% dividend yield at the moment, with a 3-year dividend growth rate of 31.2%. The forward dividend payout ratio is just 36.52%.

Nexstar Media Group (NXST)

Nexstar Media Group (NASDAQ:NXST) is a media company that owns several stations in the U.S. and is affiliated with major networks. It is quite under-the-radar, but has been growing and gushing cash, whereas other “legacy media” companies are seeing a decline. It is currently in advanced negotiations to acquire a rival broadcaster named Tegna (NYSE:TGNA). A recent court ruling invalidated an FCC restriction on owning multiple top stations in the same market.

Nexstar on its own has been a cash machine. The company generated $1.1 billion in free cash flow last year, up 29.37%. In comparison, the market cap is $5.89 billion as of writing. Even if you look at the enterprise value, it’s trading at less than 6 times EBITDA.

NXST stock comes with a 3.83% dividend yield and a 3-year dividend growth rate of 34.2%. The forward dividend payout ratio is just 28.72%. On top of that, Nexstar does aggressive share buybacks. Outstanding shares have been reduced from 40.7 million in 2021 to 30.6 million in 2024 through sustained buybacks.

Lear Corporation (LEA)

Lear Corporation (NYSE:LEA) is a major supplier to the automotive industry. It sells car seats and electrical systems. They make basic seat frames, cushions, full seat assemblies, and also wiring, connectors, power distribution components, and related tech.

LEA stock has declined in the past four years by almost 54%, but it has likely bottomed out now. I see significant upside potential going forward due to the demand for automotive parts rebounding. Interest rate cuts should cause a significant uptick in vehicle demand. And even if the environment remains restrictive, the demand for car parts will remain high. The average passenger car in the U.S. is 14.5 years. Hence, demand is climbing fast as these aging cars are being worn down.

I expect a turnaround soon, as analysts expect one more year of negative EPS growth for all of 2025. EPS is expected to decline by 3% this year before growing 15.58% in 2026, before accelerating significantly later in the 2020s. Revenue is also expected to decline 2.2% in 2025 before growing significantly in the coming years. You’re paying just 5 times operating cash flow for the stock.

The dividend yield is 3.22%, with a 3-year dividend growth rate of 20.3%. The forward dividend payout ratio is just 21.73%. The company has also done buybacks of around 3.5% of outstanding shares annually in the past three years.

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