Key Points
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Consider investing in companies with a strong history of dividend increases and low payout ratios.
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Keep an eye on each company’s earnings trajectory to ensure the sustainability of dividends.
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Investing in dividend stocks is a great way to build your wealth over time. With patience and careful stock selection, you can practically transform your portfolio into a cash distribution generator.
Among the most reliable dividend-paying companies are ones that increase their distributions. Today, you can get started buying dividend growth stocks, but it’s important to know what to look for. So, right now I’m going to reveal some essential tips along with a handful of high-confidence dividend stock picks to get you started.
Goldman Sachs (GS)
First and foremost, it’s wise to narrow down your search to blue-chip companies that are market-sector leaders. A perfect example would be Goldman Sachs (NYSE:GS), an established leader in the financials/banking sector.
You’ll want to concentrate on businesses with a strong track record of dividend raises. A quick glance at Goldman Sachs’ dividend history shows that the company tends to increase its distributions (per dollar value and not necessarily dividend yield percentage) once every four quarters.
This indicates that Goldman Sachs is a reliable dividend grower. Currently, the company’s quarterly distributions of $4 per share indicate a 2.19% forward annual dividend yield.
Next, we’ll take note of Goldman Sachs’ payout ratio. This is a percentage that divides a company’s per-share dividend distributions by the company’s per-share earnings.
If a company’s payout ratio is above 50%, this suggests that the current dividend payments might not be sustainable for the long term. That’s not a problem for Goldman Sachs, which has a payout ratio of only 28.67%.
Also on the topic of dividend payment sustainability, it’s encouraging if a company’s earnings are growing. We can see that Goldman Sachs grew its net earnings applicable to common shareholders from $3.931 billion in 2024’s first quarter to $4.583 billion in the first quarter of 2025. Thus, Goldman Sachs checks all the right boxes and GS stock is a rock-solid dividend growth pick to start off with.
Oracle (ORCL)
After delving into the financials sector, now we can diversify into the technology field. Oracle (NYSE:ORCL), a leader in data-center cloud computing, certainly qualifies as a tech giant.
We know what to look for, so let’s determine whether Oracle meets the criteria. To begin with, Oracle has historically raised its dividend distributions once every couple of years, so the company’s dividend growth has been gradual but steady.
Nowadays, Oracle offers distributions of $0.50 per quarter or $2 per year. This translates to a forward annual dividend yield of 0.8%.
We’re not talking about gigantic dividend payouts here, but Oracle’s distributions are consistent and highly sustainable. Notably, Oracle’s payout ratio is 41.47%, so the company’s earnings should be sufficient to fund the current dividend payments.
Furthermore, Oracle reported net income of $3.427 billion in the quarter ended May 31, 2025, versus $3.143 billion in the year-earlier quarter. In other words, Oracle is both a dividend grower and an earnings grower, so feel free to purchase a few ORCL stock shares for your portfolio today.
T-Mobile (TMUS)
For even more portfolio diversification, we’ll steer into different territory now with T-Mobile (NASDAQ:TMUS) stock. Surely you already know that T-Mobile is a famous telecommunications firm, but we need to find out whether this company is also a dividend grower.
T-Mobile’s track record shows that the company has a history of hiking its dividend distributions once per year. Using the company’s most recent quarterly distribution of $0.88 per share, we can calculate a forward annual dividend yield of 1.47%.
Does T-Mobile pass the payout ratio test? The answer is yes as T-Mobile’s 33.23% dividend payout ratio falls well below my 50% cutoff point.
Turning to T-Mobile’s earnings, it’s evident that the company is sufficiently capitalized to continue paying its dividends. Impressively, T-Mobile grew its net income from $2.925 billion in Q2 of 2024 to $3.222 billion in the second quarter of 2025. These data points should convince you to consider owning TMUS shares and collecting dividends with confidence.
Diversify and Check the Stats
By now, you should have an idea of how I select top stocks for long-term dividend growth. I’m not hunting for the highest yields; instead, I look for market leaders with sustainable dividend distributions.
Plus, I want to find stocks representing companies in a variety of industries. Along with that, I’ll refine my search to well-known large-cap businesses with payout ratios below 50%.
Some more examples to get you started on your own research are Eli Lilly (NYSE:LLY) (payout ratio of 45.4%), Deere (NYSE:DE) (payout ratio of 30.5%), and Lowe’s (NYSE:LOW) (payout ratio of 38.4%). Always check the vital stats on these and other dividend-paying firms, be open-minded but also be selective, and enjoy your cash distributions in the coming quarters.
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