Three dividend stocks that beat inflation and promise long-term growth

Investors will get the latest inflation data today thanks to the PCE (Personal Consumption Expenditures) index. Inflation reached 2.5% in August, meaning prices rose by that amount year-on-year. Although many consumers, especially those with low and middle incomes, are still feeling the effects of inflation, for dividend-focused investors, the current rate of inflation is an opportunity to find investments that outperform inflation.

In this article, we look at three companies that are not only increasing their dividends, but doing so much faster than inflation is rising.

Hershey $HSY

Sweet returns for investors - One company worth paying attention to is Hershey, known for its candy. In 2024, Hershey increased its dividend by 15%, from $1.19 to $1.37 per share. This means that even when inflation was over 9%, Hershey was rewarding investors with a yield that beat inflation.

Even though Hershey's stock price has only risen 4.3% in 2024, it is still down 6.3% over the past 12 months. However, Hershey is one of the few food companies to post a positive return in 2024. The negative factor is rising cocoa prices, which is cutting into the company's earnings, but the long-term outlook is still attractive to investors. Despite concerns about the long-term impact of the new GLP-1 drugs on the confectionery industry, Hershey's financials still show revenue growth.

Home Depot $HD

Investment opportunity as housing market recovers - The second company on our list is Home Depot, the home improvement and building products giant. Shares of Home Depot are up 14.6% in 2024 and up as much as 30% over the past 12 months. While the stock may seem slightly overvalued given its value at 26 times future earnings, investors are seeking it out because of the recovery in the housing market, which should benefit from falling interest rates.

Dividend investors in particular find Home Depot attractive. The company has increased its dividend by an average of 11.69% per year over the past three years and has done so annually for the past 15 years. The current annual dividend payout of $9 per share is a great attraction for long-term investors.

UnitedHealth $UNH

A healthcare giant with steady growth - The healthcare sector has traditionally been a stable industry that delivers both growth and stable dividends. UnitedHealth Group, one of the largest health insurers in the U.S., is an excellent choice due to its broad portfolio, including the Optum network, which focuses on advanced data technology and affordable healthcare.

With a market value of over $560 billion and the acquisition of LHC Group, which expands its home care offerings, UnitedHealth is solidly positioned for revenue and earnings growth. The aging U.S. population is an opportunity the company is capitalizing on. Over the past 10 years, UnitedHealth Group stock has provided investors with a total return of over 670%. Dividend growth, which has averaged 14.71% over the past three years, is another incentive for long-term investors. The company has increased its dividend for 15 consecutive years.

Disclaimer: There is plenty of inspiration to be found on Bulios, but stock selection and portfolio construction is up to you, so always conduct a thorough analysis of your own.

Source: Yahoo, Motley Fool.