High dividend growth stocks are ones raising their payout at a double-digit rate. These companies typically only started paying a dividend recently. But some businesses with competitive advantages and consistent growth can maintain a double-digit rate of increase for years, making them attractive to investors.

Below are four high-dividend growth dividend stocks to consider.

4 High Dividend Growth Stocks

Primerica

Primerica (PRI) is probably little known to dividend growth investors, but the firm is nearly 100 years old. The company offers life insurance, investment and savings, senior health, and corporate and other products through four operating segments. Total revenues reached $2,784 million in 2022 and $2,783 million in the past twelve months.

The insurance company has grown rapidly in the trailing decade. It is now the No. 3 issuer of term-life insurance in the United States. At the end of 2022, the firm insured over 5.7 million lives and administered 2.8 million investment accounts. Growth occurs through its huge exclusive licensed force of 136,000+ life insurance and 25,000+ securities salespeople. 

Primerica focuses on middle-income Americans with $30k to $100k income instead of the wealthy. This approach has driven growth and profitability. Approximately 94% of revenue was derived from term-life insurance and investment and savings products. One weakness is the Senior Health segment, which is not profitable. Also, operating expenses have trended higher.

Primerica is solidly profitable with rising free cash flow. Consequently, the company has paid a growing dividend and executed share repurchases. The firm is a Dividend Contender with a 13-year growth streak. The forward dividend yield is low at 1.29%. 

But the low yield is offset by the high dividend growth rate of ~23% in the trailing five years. Moreover, the conservative payout ratio of ~19% indicates many more years of increases to come. Also, the dividend safety is excellent. Primerica receives a dividend quality grade of an A and a financial strength rating of A+ from AM Best.

The stock price has been trending up since mid-2022, but the forward P/E ratio is still below the 5-year range. Hence, investors may want to dip into this stock.

MSCI

MSCI Inc (MSCI) is a global provider of indexes, analytics, and other financial tools. The company was spun off from Morgan Stanley (MS). Today, MSCI operates through four segments: Index, Analytics, ESG and Climate, and All Other – Private Assets. Total revenue was $2,248 million in 2022 and $2,281 million in the last twelve months.

Providing indexes and analytics has allowed MSCI to grow and sustain high profitability. The number of passive index funds and ETFs has risen dramatically in the past decade fueling subscription growth. MSCI has 37 consecutive quarters of double-digit growth for the index subscription run rate. Future growth will occur from more offerings leading to more subscriptions to asset managers, banks, hedge funds, wealth managers, etc.

MSCI is a Dividend Challenger with a nine-year streak of increases. Although the dividend yield of 1.11% is low, the dividend growth rate exceeded 28% in the past five years. Dividend safety is solid, with a moderate payout ratio of around 40% and a B+ dividend safety score. However, the company’s leverage ratio is roughly 2.7X, a little on the high side.

The stock usually trades at an elevated price-to-earnings ratio. Currently, the forward ratio is below the mid-point of the 5-year range. Thus, investors may want to take a wait-and-see approach for this stock.

UnitedHealth Group

UnitedHealth Group (UNH) is a giant healthcare insurer. The firm operates in four segments: UnitedHealthcare, Optum Rx, Optum Health, and Optum Insight. Today, the firm is the largest private health insurer in the U.S. (UnitedHealth) and the third-largest pharmacy benefits company (OptumRx). It also provides healthcare services (OptumHealth) and analytics (OptumInsight). 

UnitedHealth provides medical benefits to over 51 million members through its insurance plans internationally. As the market leader in the United States, UnitedHealth has the No. 1 or No. 2 position in 31 States, far ahead of its next closest competitor. Total revenue was $324.2 billion in 2022 and $335.9 billion in the last twelve months.

As the largest health insurer, UnitedHealth has the advantage of scale and efficiency because fixed costs can be spread out over a more extensive base. In a low-margin business like insurance, scale matters. UnitedHealth has grown organically but mainly through many acquisitions. The firm has purchased multiple companies for billions of dollars, significantly expanding its client base and offerings. As a result, the top and bottom line have risen in parallel.

UnitedHealth has assertively returned cash to shareholders through buybacks and dividends. The forwarded yield is only 1.68%, greater than the 5-year average. The dividend growth rate is more than 17% in the trailing five years. The modest payout ratio of around 29% provides confidence about future increases and safety. Furthermore, the firm has an A+/A3 upper medium investment grade credit rating.

The overall strength of UnitedHealth has made it popular with dividend exchange-traded funds (ETFs). For instance, it is a large holding for DGRO and VIG. Currently, the stock is undervalued based on its historical P/E ratio. Retail investors should look at this stock as a long-term holding.

Tractor Supply Company

The fourth stock on our list is Tractor Supply Company (TSCO), the rural lifestyle retailer. The company sells clothing, lawn and garden items, pet and livestock products, hardware, etc. Besides the 2,164 main brand name stores, it owns 81 Orschein Farm and Home and 189 Petsense stores. The brand names include 4health, Schmidt, American Farmworks, Red Shed, Redstone, Retriever, Royal Wing, Huskee, Treeline, and more.

Total revenue was $14,204.7 million in 2022 and $14,479.8 million in the trailing twelve months.

Rural retailing is a profitable niche because of limited competition. Tractor Supply Company is growing by adding more stores, selling more items, and higher ticket prices. The firm reinforces customer loyalty with 29+ million Neighbor’s Rewards Club members. The formula seemingly works, and Tractor Supply continues to flourish.

The stock is a Dividend Contender with 14 straight years of dividend growth. The average increase has been nearly 29% in the past five years. The modest payout ratio of about 38% suggests many more future increases. The dividend safety is solid, too, with an A+ score.

The share price is down after it missed expectations in the first quarter. It trades at an earnings multiple at the lower end of the 5-year range. Investors may want to buy this differentiated retailer for the long term.

Disclosure: Long UNH

A version of this post by Dividend Power originally appeared on Investor Place and was republished with permission.

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