TL;DR: The best way to find dividend growth stocks is to look for companies that have a consistent track record of growing dividends (at least 5 to 10 years), backed by strong fundamentals like payout ratios, earnings growth, and revenue growth. Key metrics include earnings growth rate, payout ratio, and leverage. Tools like Koyfin, Finviz, and Zacks allow investors to combine these filters to create a reliable shortlist of dividend growers.
introduction
Dividend growth stocks are companies that have a track record of increasing dividends year after year. High returns indicate profitability and disciplined financial management, as only companies with consistent earnings and cash flow are able to maintain them.
For investors, this means two things: income that grows over time, and ownership in companies that are flexible enough to continue paying more in the future.
This article explains how to screen dividend growth stocks, which metrics to focus on, and which tools can help.
How to Screen Dividend Growth Stocks
When examining, focus on categories that show earnings sustainability and company strength.
Best Screening Tools for Dividend Growth Stocks
Here are some of the widely used tools that investors rely on:
- Quivin – Modern and easy-to-use interface; Over 500 customizable metrics including dividend history, payout ratios and growth rates. Ideal for dividend growth investors because it combines screening, watchlists, advanced charts, news, alerts and portfolio tracking, making it easy to go from building a screen to analyzing and monitoring dividend growers in one place.
- Final view – Free and direct; Filter by yield, payout ratio and earnings growth.
- Zacks – Focuses on the safety of earnings-based dividends, supported by proprietary ratings.
- Morningstar – Provides analyst comments and earnings durability scores.
Sample screen you can play
Here’s an example of how to set up the earnings growth screen in Koyfin. These filters highlight companies with consistent dividend growth supported by strong fundamentals. You can tweak the numbers depending on how conservative or aggressive you want:
- sector: Basic food, healthcare and industries.
- Market value: ≥ $2B
- Consecutive annual increases: ≥ 5 years
- CAGR of earnings per share, 5 fiscal years: ≥ 5% annually
- LTM Payout Ratio: ≥ 60%
- Diluted EPS before increase, CAGR, 5 fiscal years: ≥ 5%
- Total revenue CAGR, FY5: ≥ 3%.
- Total Debt/Equity, LTM: ≥ 200%(2.0x)/li>
We’ve created a screening tool with these precise filters, so you can instantly see the full list of eligible dividend growth stocks.
View Koyfin’s Dividend Growth Checker
What to do after turning on the screen
Your screener will create a list of companies that pass these filters. The next step is to refine them into a shortlist:
- Ranking by dividend yield (indicated) – High yields (>5%) may indicate risk, while low yields (<1.5%) can still be attractive if combined with strong growth. You can also use Dividend Yield NTM, which uses Wall Street earnings estimates to calculate the dividend yield.
- Ranking by earnings growth (5Y CAGR) – Shows which companies have raised revenues the fastest. High growth can compensate for low returns.
- Check payment ratios A lower percentage means more room to increase profits in the future.
- Use earnings snapshot – At Koyfin, this view combines yield, payout ratio, pipeline, growth history, and payment schedule so you can quickly see if a company fits your strategy.
Open earnings snapshot in Koyfin
From here, group companies into profiles:
1. Low dividend yield/high growth
- What does it mean: The yield is usually less than 2%, but profits compound at 10%+ annually.
- Why it matters: Even with a modest initial return, income can grow much faster than the rate of inflation.
- in order to: Long-term investors who prioritize future income growth over immediate return.
View Koyfin’s Low Productivity/High Growth Screener
2. Moderate dividend yield/moderate growth
- What does it mean: The yield ranges between 1.7 and 4.5%, with earnings growing at 4-12% annually.
- Why it matters: Balances current income with steady growth.
- in order to: Investors looking for stable, long-term holdings that provide income and growth.
Moderate Yield View/Moderate Growth Screening at Koyfin
3. High dividend yield/low growth
- What does it mean: The yield is 4% or higher, with earnings growth typically less than 3%.
- Why it matters: It is generating higher income now, but requires careful review since higher returns can indicate risk.
- in order to: Investors who focus on income, but require more scrutiny to ensure that the dividend is sustainable.
(Less common in commodities, healthcare, and industrials, so we ran a separate screen in utilities, telecommunications, REITs, and tobacco.)
View Koyfin’s high throughput/low growth sorter
Risks and considerations
- High returns can be misleading: A very high yield may indicate financial stress.
- Sector differences: Utilities and REITs have higher dividend yields and payout ratios but can still be sustainable.
- Date is not a guarantee: A long streak does not guarantee increased profits in the future. Look for any signs of poor work.
- Sector focus: Many profit growers cluster in a few industries. Diversify across sectors to reduce risk.
Our view is derived solely from historical information and analyst forecasts, using an unbiased approach. Please note that our articles do not serve as financial guidance.
