Inflation-Busting Dividends: 7 Stocks Raising Payouts 10%+ Annually

  • These dividend growth stocks are enticing choices because they offer attractive payout growth rates that exceed the inflation rate.
  • Texas Roadhouse (TXRH): The steakhouse chain continues to expand profit margins and maintain a double-digit growth rate.
  • Microsoft (MSFT): It’s one of the most well-diversified businesses in the stock market.
  • American Express (AXP): As the prices of goods and services increase, American Express will make more money from every transaction.
  • Continue reading to discover more dividend growth stocks to buy.
dividend growth stocks - Inflation-Busting Dividends: 7 Stocks Raising Payouts 10%+ Annually

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Inflation continues to be a concern, but there is a light at the end of the tunnel. The May inflation reading only came in at 2.6%. The month-to-month rate of inflation was the coolest in more than four years.

Lower inflation can lead to interest rate cuts that fuel the stock market. However, a cooler inflation reading is still inflation. Your money lost 2.6% of its purchasing power on a year-over-year basis.

Investors can load up on dividend stocks with high payouts to navigate inflation. Some corporations hike their dividend distributions by more than 10% annually to keep investors on board. This high growth rate comfortably breezes past inflation and will increase your purchasing power.

A high dividend growth rate usually indicates a successful corporation that can reward long-term investors. Corporations can only maintain high dividend growth rates if their revenue and net income grow. These inflation-busting dividend stocks deliver high payouts and returns for long-term investors.

Texas Roadhouse (TXRH)

An outside and closeup view of a Texas Roadhouse, Inc. (TXRH) sign
Source: Jonathan Weiss / Shutterstock.com

Texas Roadhouse (NASDAQ:TXRH) offers a 1.4% yield and trades at a price-to-earnings ratio of 34x. The steakhouse restaurant chain is up by 41% year-to-date and more than tripled over the past five years. 

The company recently hiked its quarterly dividend from 55 cents to 61 cents per share, marking a 10.9% year-over-year increase. Texas Roadhouse reported strong financials in the first quarter. Revenue increased by 12.5% while net income increased by 31% from a year ago. The company closed out the quarter with an 8.6% net profit margin.

Texas Roadhouse restaurants continue to attract and retain new customers. Same-store sales increased by 8.4% year-over-year at company-owned restaurants. The growth rate was 7.7% year-over-year for domestic franchise restaurants. Texas Roadhouse has 644 company-owned restaurants and 109 franchise restaurants. That’s a 7% growth rate from the company’s 704 total restaurants a year ago.

Microsoft (MSFT)

Image of corporate building with Microsoft logo above the entrance.
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Microsoft (NASDAQ:MSFT) stock more than tripled over the past five years and is up by 24% in 2024. The company operates in multiple industries and is a top firm in most of them. Microsoft is the second-largest cloud computing provider, generating $35.1 billion from its cloud platform this quarter. That’s a 23% year-over-year growth rate, and Microsoft Cloud made up more than half of the company’s total revenue.

The tech giant’s overall numbers were also impressive. Revenue increased by 17% while net income was up by 20%. Microsoft closed out the quarter with a 35.5% net profit margin.

Wall Street analysts are bullish on the stock and believe that it has more room to run. The average price target suggests a 9% upside from current levels. Many analysts have been raising their price targets, but the highest target currently stands at $600 per share. Microsoft offers a 0.6% yield and raised its dividend by 10% last year.

American Express (AXP)

the American Express logo etched into wood
Source: First Class Photography / Shutterstock.com

American Express (NYSE:AXP) trades at a reasonable P/E ratio of 19x and offers a 1.2% yield. Shares are up by 25% year-to-date and gained 88% over the past five years. American Express has regularly maintained a double-digit dividend growth rate for several years, including a 17% hike earlier this year

The fintech firm receives a percentage of each transaction from its debit and credit cards. American Express offers enticing rewards through its cards, which gives them more appeal than cash. The firm’s credit cards have been a big hit with younger generations and helped to fuel 11% year-over-year revenue growth in the first quarter. Net income jumped by 34% in the quarter, resulting in a 16.9% net profit margin.

American Express is currently rated as a “moderate buy.” The highest price target of $275 per share implies a potential upside of 17%. The company offers a more reasonable valuation and better growth prospects than other credit card issuers.

Badger Meter (BMI)

A zoomed in photo of a drop of water hitting a container of water's surface.
Source: Sambulov Yevgeniy/ShutterStock.com

Badger Meter (NYSE:BMI) is a water solutions company that uses advanced technology to monitor water quality and flow. The Company has been crushing the stock market with a 20% year-to-date return and a 215% five-year gain. The stock trades at a P/E of 54x and offers a 0.6% yield.

While it’s hard to find a corporation that has regularly raised its dividend by 10% or more each year, it’s even more challenging to find a stock in Badger Meter’s class. Last year, the water solutions provider hiked its quarterly dividend from 22.5 cents per share to 27 cents per share. That’s a 20% year-over-year increase, which comfortably exceeds the inflation rate.

Revenue and earnings growth both looked good in the first quarter. Sales increased by 23% year-over-year to reach $196.3 million. Diluted earnings per share surged by 50%, jumping from 66 cents per share to 99 cents per share.

Broadcom (AVGO)

broadcom (AVGO) logo outside office building
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Broadcom (NASDAQ:AVGO) is a leader in the AI chip industry. It’s not producing the same growth numbers as Nvidia (NASDAQ:NVDA), but Broadcom has established itself as a top AI beneficiary. The stock is approaching an $800 billion market cap and can realistically have a $1 trillion market cap within the next one to two years.

Momentum with AI stocks is still strong, and Broadcom has certainly earned the attention. The tech firm reported 43% year-over-year revenue growth in the second quarter of fiscal 2024. Broadcom also raised its annual revenue guidance, suggesting that growth will accelerate. Revenue from AI products reached a record $3.1 billion in the quarter.

Broadcom has outperformed the stock market by a wide margin. Shares are up by 52% year-to-date and have surged by 485% over the past five years. A recently announced 10-for-1 stock split has brought more attention to the stock. The company offers a 1.3% yield and raised its dividend by 14% for fiscal 2024.

Visa (V)

several Visa branded credit cards
Source: Kikinunchi / Shutterstock.com

Visa (NYSE:V) regularly delivers net profit margins above 50% while increasing shareholder value. The stock is up by 50% over the past five years and offers a 0.8% yield. Visa makes revenue from each transaction, which makes it a good choice for beating inflation.

The fintech firm also delivered a double-digit dividend growth rate for several years. Visa continued that trend with a 15.6% dividend hike last year. The dividend hike also came with the announcement of a $25 billion buyback.

Visa also reported solid Q2 FY24 financials with 10% year-over-year revenue and net income growth. Cross-border volume was a major growth catalyst that increased by 16% from a year ago. Visa isn’t the type of stock that significantly outperforms the stock market, but it gives investors an edge over inflation for several decades.

Wall Street analysts are bullish about the company’s long-term potential. The stock has received a “strong buy” rating and has a projected 19% upside based on the average price target.

Mastercard (MA)

Close up of a pile of mastercard credit load debit bank cards.
Source: David Cardinez / Shutterstock.com

Mastercard (NYSE:MA) recently hiked its quarterly dividend from 57 cents per share to 66 cents per share, marking a 15.8% year-over-year increase. Like Visa and American Express, Mastercard offers a high dividend growth rate and is positioned to keep pace with inflation.

The fintech firm reported $6.3 million in net revenue in the first quarter. That’s a 10% year-over-year improvement. Net income increased by 28% from a year ago as the company continued to expand its profit margins. Mastercard closed out the quarter with a 47.4% net profit margin. Mastercard CEO Michael Miebach cited 18% cross-border volume growth in the press release and mentioned that the company ended up with “new deal wins in every region.”

Mastercard stock has delivered solid gains for investors. Shares are up 6% year-to-date and gained 65% over the past five years. The stock currently trades at a P/E ratio of 35.5x and offers a 0.6% yield.

On this date of publication, Marc Guberti held long positions in TXRH, MSFT, AVGO, and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor held a LONG position in NVDA.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.


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