Every investor wants to own a stock that doubles overnight. Alternatively, only a handful of investors have the patience to hold companies for a decade and benefit from the power of compounding.
Notably, investing in dividend-growth stocks is a solid strategy for building long-term wealth.
The best dividend stocks raise payouts across market cycles, which enhances the yield-at-cost over time. In addition to a steadily growing yield, investors can also derive returns via capital gains.
Kirsten Cabacungan, an investment strategist in the Chief Investment Office for Merrill and Bank of America Private Bank, explained:
“Companies that have consistently increased their dividends tend to be more stable, higher-quality businesses, which historically have weathered downturns and are more likely to have the ability to pay dividends consistently”
Now, new research from Invesco shows that companies that steadily raise their dividends have quietly outrun the broader market over the last 50 years, all while falling less during downturns.
Top dividend stocks outperform over 50 years
Here is the meat of the story.
Invesco turned to Ned Davis Research, which tracked S&P 500 stocks by dividend policy over the 50 years ending Dec. 31, 2025, according to an Invesco report shared with me.
The results are telling.
Stocks that raised their dividend or started paying one for the first time returned an average of 13% a year.
This group beat every other group Ned Davis tracked:
- Dividend growers and initiators: 13% average annual return
- All dividend-paying stocks: 12.7%
- Dividend payers that held their payout steady: 11.1%
- Stocks that paid no dividend at all: 11.5%
- Dividend cutters and companies that eliminated payouts: 9.5%
In other words, the group of top dividend stocks that consistently grew their payouts beat companies that held dividends steady by nearly two full percentage points a year.
Compounded over five decades, that gap adds up to a massive difference in wealth.
Dividend stocks cushion market downturns
Ned Davis Research also measured beta, a gauge of how much a stock swings compared to the overall market, using rolling ten-year windows dating back to 1983.
Dividend growers posted a beta of 0.94, while stocks that paid no dividend came in at 1.11, according to the Invesco report.
A lower beta means smaller swings in both directions, which is key during volatile economic downturns.
More Dividend Stocks:
- Does IBM pay dividends? History, yield & payout ratio explained
- Does Walmart pay dividends? Its yield and payouts explained
- Does Sandisk pay dividends? Will it split its stock?
Invesco’s own Diversified Dividend Fund, which leans into dividend growers, offers a real-world example.
The fund topped the Russell 1000 Value Index in each of the seven worst market downturns since 2007, by an average of 4.74 percentage points, per the same report from Bryan Richardson, senior client portfolio manager at Invesco.
That included a smaller decline during the 2022 bear market and the 2008 financial crisis, two very different kinds of downturns.
AVGO and Nike are dividend growth stocks
Among the hottest dividend stocks over the past 15 years is Broadcom.
The chip giant began paying a dividend back in December 2010. Its annual payout has risen from $0.03 per share in 2010 to $2.60 in 2026, which translates to a compounded annual growth rate of almost 32%.
Since the start of 2011, Broadcom (AVGO) stock has returned 12,300% to shareholders, given data from Y-charts. If we account for dividends, cumulative returns are closer to 17.270%.
Related: Early Broadcom stock investors now earn 16.8% dividend yield
However, not all dividend growth stocks have delivered game-chainging returns.
No strategy is foolproof, and Nike reminds us of that.
The sneaker giant has raised its dividend for 24 straight years, making it a textbook dividend grower.
But the blue-chip stock has struggled in recent years and trades at a 12-year low. Since the start of 2014, Nike stock has returned less than 15% in dividend-adjusted gains.
Nike’s dividend has kept climbing even as the stock has fallen, pushing its yield above 4%. That is the tradeoff with dividend growers.
A rising payout can signal strength, but it does not protect a stock from potential underperformance.
The takeaway for long-term investors
Fifty years of data will not tell you what any single stock does next month.
But it does suggest that companies willing to keep raising their dividend, through recessions, rate hikes, and everything in between, tend to reward patient shareholders over time.
It is a pattern investors have seen play out again and again, decade after decade.
Related: Schwab Dividend ETF holders: Compare it to Vanguard dividend ETF
