Dividend-paying stocks are ideal for outperforming the market or generating passive income. Finding dividend growth stocks, companies that have shown the ability and willingness to raise their distributions over time, providing consistent and growing income to investors, are even more valuable, particularly in this current market.

Many investors seek stability over growth as a rotation builds in the broader market. There’s historical precedence for such a view. From 1973 to 2023, S&P 500 non-dividend stocks provided a 4.27% average annual return, while dividend-paying stocks achieved 9.17% returns. That’s more than twice the historical return for companies that pay dividends, making these great places for investors to start when looking for portfolio anchors.

With that in mind, let’s examine three top dividend growth stocks that are worth considering at current levels.

Johnson & Johnson (JNJ)

Despite facing legal issues and spin-off concerns, Johnson & Johnson (NYSE:JNJ) remains a solid dividend stock. JNJ exposes investors to a business model supported by diverse revenue streams and solid cash flow growth. This long-term growth profile has allowed the company to raise its dividends consistently over time, now paying out a yield of more than 3%. That’s not shabby, particularly for those who expect the company to continue to hike its distributions over time.

Johnson & Johnson’s strong late performance can be tied to several key factors. However, among the growth many investors are seeing is the company’s increasing focus on its core oncology business. Via its recent Kenvue spin-off, the company has certainly made steps toward reinvigorating investors around the idea that JNJ is more of a pharma play than a consumer discretionary stock. That’s a move many existing investors hope will bolster the company’s multiple moving forward.

There are some litigation concerns around JNJ stock, leading to a valuation that certainly appears to be undervalued on a historical basis. That said, assuming the market has priced in the totality of the company’s legal exposure, now could be a good time to consider adding to a position in this name.

3M (MMM)

3M (NYSE:MMM) is a global manufacturer of diverse products like adhesives, medical supplies and electronics under brands like Scotch and Post-it. The company operates across the safety and industrial, transportation and electronics, health care and consumer sectors. Competing with other big industrial names, 3M remains a leader in its core sectors despite increasing competition in recent years.

Impressively, MMM stock surged 23% in one day after a strong Q2 report and a notable guidance raise. However, despite this recent surge, 3M continues to trade at a reasonable valuation of around 17 times forward earnings. The company’s streamlining of its core operations, focus on growth and relatively attractive valuation position this dividend growth stock with a 2.2% yield well for strong long-term upside.

Large settlements tied to faulty earplugs have impaired the company’s recent financials, as PFAS litigation has clearly impacted the stock. But with a $6 billion lawsuit now in the rearview mirror, dividend investors have a bright future to look forward to with this name.

Visa (V)

As one of the most proven dividend stocks to buy and hold, a $10,000 investment in Visa (NYSE:V) 15 years ago would now be worth over $200,000. That’s largely due to Visa’s business model, which earns transaction fees on its 4.3 billion cards. Essentially, as more and more consumers spend more and more of their paychecks on credit cards rather than in cash or via other digital payment methods (such as debit), Visa stands to benefit. In a way, the company represents a strong inflation hedge — as prices rise, so too should the overall price of the baskets of goods consumers buy, increasing fees proportionally for credit card providers such as Visa.

Unfortunately, Visa’s stock price has underperformed recently, as fears of reduced consumer spending and a potential recession appear to have picked up. Despite these concerns, analysts at JPMorgan (NYSE:JPM) appear to remain bullish on V stock. In fact, JPM analyst Tien-Tsin Huang recently noted that now might be a good time to consider buying Visa on this recent weakness. He believes that while regulatory and market concerns are valid, the recent stock decline appears excessive.

I tend to agree. Visa is widely expected to meet Wall Street’s targets despite some deceleration in credit card volumes. While recessionary forces are certainly building, Visa is a company with among the strongest secular tailwinds in the market. I don’t see that changing anytime soon.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. 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 did not have (either directly or indirectly) any positions in the securities mentioned in this article.