3 Dividend Growth Stocks That Have Doubled Their Payouts in 5 Years

If you're a dividend investor, you shouldn't bother with stocks that don't raise their payouts. Inflation has drastically chipped away at consumers' purchasing power in recent years, highlighting just how important it is for dividend income to rise over the long run. Dividend growth can be extremely valuable for investors, even if a stock doesn't appear to be offering a high yield today. If a business is growing and its dividend income is rising, investors can still be generating significant recurring income down the road.

Three stocks that don't offer the highest yields today but have solid growth prospects and have been raising their payouts at a high rate are Eli Lilly (NYSE: LLY) , Broadcom (NASDAQ: AVGO) , and Mastercard (NYSE: MA) . Here's why you'll want to consider these stocks, not for just their growth prospects, but for their dividend payments as well.

Eli Lilly

These days, Eli Lilly is popular with investors for its diabetes and weight loss medications, Mounjaro and Zepbound. And there's good reason for that, as the market for anti-obesity treatments is massive, potentially topping $100 billion. There's significant money to be made there, and Eli Lilly is establishing itself as a major player in that space.

But on top of the growth opportunities, there's also the stock's dividend, which just doesn't get the attention it deserves. Prior to the financial crisis, Eli Lilly had a dividend growth streak that spanned 40-plus years of increases to its payout. It ended up having to break that streak, but it's back to growing its dividend again -- at an aggressive pace.

The healthcare stock currently pays investors a quarterly dividend of $1.30, which is a little over double the $0.645 it was paying five years ago. Its most recent increase was a 15% bump up to the dividend, which was announced last year.

While Eli Lilly's 0.6% dividend yield may look underwhelming, if not for the stock's massive 260% gains over the past three years, that yield would be much higher than it is right now. Whether you like it for its growth opportunities in the anti-obesity market or for its growing dividend, there are multiple excellent reasons to buy this top healthcare stock right now.

Broadcom

One tech stock that has been picking up steam of late is Broadcom. The semiconductor company is in a great position to benefit from an uptick in demand due to artificial intelligence (AI). It also recently completed a 10-for-1 stock split, which could drive some additional excitement in the near term.

Strong AI demand was a key reason why Broadcom was able to generate 43% revenue growth during its most recent quarter, which ended on May 5. Revenue from its AI products hit a record $3.1 billion, and with AI still in its early growth, there could be a lot more room for Broadcom's business to continue soaring in the years ahead.

Broadcom stock offers a seemingly average dividend yield of 1.3%, but that fails to recognize the growth in the payout over the years. At $5.25, its current quarterly dividend payment is roughly twice the size of the $2.65 it was paying investors in 2019. As the business continues to grow due to AI, there may be room for more generous rate hikes in the future from Broadcom.

Mastercard

Credit card giant Mastercard is an excellent business to invest in. For it to be successful, the economy just needs to grow and do well, which should be enough to trigger greater use of its credit cards. Even amid challenging economic conditions, Mastercard has continued to do well. In the first three months of the year, net revenue of $6.3 billion was up by 10% year over year, and net income increased by 28% to $3 billion.

Its dividend yield of 0.6% isn't terribly high, but in the past five years, Mastercard's payout has doubled from $0.33 to $0.66. Mastercard definitely has room for some significant rate increases should it choose to become even more aggressive in the future, as its payout ratio is incredibly low at around 20% of its trailing earnings.

Investing in Mastercard is a good way to bet on the economy's overall success, and that's why it's not surprising that the stock is in Warren Buffett's portfolio. It's a solid, safe growth stock to buy and hold for the long haul. While its dividend yield may not look that enticing, given the balance of both growth and dividend income you can get from it, Mastercard is a stock that can be suitable for any type of portfolio.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard. The Motley Fool recommends Broadcom and recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy .