These 3 High-Quality Dividend Growth Stocks Keep Crushing The Stock Market: Albemarle (ALB), Microsoft (MSFT) and Target (TGT)

I started buying high-quality dividend growth stocks in early 2010. In doing so, I went from in debt at that time to financially free in 2016.

By the way, I explain exactly how I achieved financial freedom in just six years in my Early Retirement Blueprint. If you’re interested, you can download a free copy of my Early Retirement Blueprint here.

Dividend growth investing has completely changed my life. My portfolio now produces enough dividend income for me to live off of. But it gets even better than that.

While dividend growth investing’s main strength, in my opinion, lies in the way it can allow you to build safe, growing, passive income, it can also allow you to outperform the S&P 500.

It’s like having your cake and eating it, too. Today, I want to tell you about three high-quality dividend growth stocks that keep crushing the market. Ready? Let’s dig in.

Dividend Growth Stock #1 That Keeps Crushing The Market: Albemarle (ALB)

Albemarle is a chemical manufacturing company with a market cap of $27 billion.

What doesn’t Albemarle offer? Want exposure to fast-growing lithium demand? Check. They’re one of the world’s largest lithium producers. Want a safe, growing dividend? Albemarle’s got you covered here, too.

Albemarle is a Dividend Aristocrat, with 27 consecutive years of dividend increases.

And with the dividend secured by a low payout ratio of 41.1%, based on midpoint guidance for this fiscal year’s adjusted EPS, this is a safe dividend that you can sleep well at night with. The ten-year DGR of 10.5% isn’t knocking you dead. Nor is the stock’s yield of 0.7%. But this is a compounder that just keeps crushing the market.

This stock is up 53% YTD, and it just keeps running laps around the S&P 500.

The S&P is up about 20% YTD, so Albemarle has completely lapped it. But this isn’t a one-year phenomenon. It’s a long-term thing. The S&P 500 has a CAGR of right about 16.5% over the last decade, including reinvested dividends. Albemarle, meanwhile, sports a CAGR of over 19.5% over that same time frame, which would have turned a simple $1,000 investment 10 years ago into almost $6,000 today. And that’s all while you collect that safe, growing dividend income along the way. If you want market-crushing performance, lithium exposure, and safe, growing dividend income from a Dividend Aristocrat – all in one package – it’s Albemarle.

Dividend Growth Stock #2 That Keeps Crushing The Market: Microsoft (MSFT)

Microsoft is a multinational technology corporation with a market cap of $2.3 trillion.

Microsoft, as I’ve said so many times, is one of my favorite dividend growth stocks of all. If one were to try to imagine the perfect company in the year 2021, it’d probably look a lot like Microsoft. It prints money by providing the world with the products and services it demands, like PCs, software, networking, and cloud computing. And that’s afforded them the opportunity to reward shareholders with reliable, rising dividends.

Microsoft has increased its dividend for 20 consecutive years.

Their current quarterly dividend of $0.62 per share is more than triple the $0.20 per share it was in the fall of 2011 – 10 years ago. And it’s this growth in a dividend that yield chasers always miss. They miss the growth forest for the yield trees, focus purely on today’s yield, and forget about where things are going to be 10 or 20 years from now. As the great Wayne Gretzky said – and I’m paraphrasing here – skate to where the puck is going to be. Microsoft’s yield of 0.8% isn’t huge. But the 10-year DGR of 14.3% does add up, as I just showed you. This is also an extremely safe dividend, with a very low payout ratio of 30.8%. More to the point, though, Microsoft’s total return is awe-inspiring.

This stock is up 40% YTD, doubling the market.

Think that’s just a 2021 thing because of the whole work-from-home paradigm shift? Think again. This is a long-term total return machine, crushing the market at every turn. Its 10-year CAGR of slightly under 30% is almost double the market’s 10-year CAGR, including reinvested dividends. Doubled the market this year. Almost doubled the market over the last 10 years. A $1,000 investment in this stock a decade ago would be worth $13,500 today.It doesn’t take a genius to smash the stock market. Simply invest in high-quality dividend growth stocks like Microsoft for the long term.

Dividend Growth Stock #3 That Keeps Crushing The Market: Target (TGT)

Target is an American retail corporation with a market cap of $119 billion.

Investing in world-class retailer Target is like hitting the bullseye, because it gives you everything you could possibly want as an investor. It has excellent fundamentals. It’s run at a high level. It has great long-term prospects, due its positioning in both physical retail and e-commerce. And it rewards shareholders handsomely. Those rewards come partly in the form of safe, growing dividends.

Target has increased its dividend for 54 consecutive years.

This is a Dividend Aristocrat and a Dividend King. It’s among the best of the best dividend growth stocks. The 10-year DGR of 12.3% is solid, and they most recently increased their dividend by more than 32%! Even after that monster dividend increase, the payout ratio, at 28.7%, is incredibly low. This is a dividend you can set your watch by, which makes it perfect for living off of. While the yield of 1.5% isn’t super high, it’s the total return story here that this stock is really telling – if you’re listening.

The stock is up 37% YTD, but this impressive performance has been going on for years.

It’s crushed the S&P 500 this year. But it’s been doing that for many years now, so it’s no surprise. Check this out. Target has a CAGR of 20.1% over the last decade, which would have turned a $1,000 investment 10 years ago into more than $6,200 today. Yep. That’s a bullseye. This Dividend Aristocrat has crushed the market over the last decade, it’s crushed the market this year, and it’s highly likely it’ll keep crushing the market for years to come. I don’t make successful long-term investing more difficult than it needs to be. I stick to high-quality dividend growth stocks for the long term. You should consider doing the same.

— Jason Fieber

P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.