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2 Leading Dividend Growth Stocks Poised to Keep Outperforming the Market in 2023

Table of Contents


  • Uncertainty over the Federal Reserve’s rate outlook, growing recession fears, and stubborn inflation will continue to dictate investor sentiment through the end of 2023.
  • I remain constructive on profitable blue-chip companies with growing dividend payouts and high free cash flow amid the current market environment.
  • As such, I recommend buying shares of Hormel Foods and UnitedHealth Group.
  • Looking for more top-rated stock ideas to add to your portfolio? Members of InvestingPro get exclusive access to our research tools and data. Learn More »

High-quality dividend-paying stocks have been some of the market’s top performers over the past year as they tend to provide investors with a solid income stream, regardless of economic conditions.

As such, using the InvestingPro stock screener, I ran a methodical approach to filter down the 7,500-plus stocks that are listed on the NYSE and Nasdaq into a small actionable watchlist of established companies that have solid profitability, healthy cash flows, and years of strong dividend growth.

My focus was on companies with a market cap of $10 billion and above.InvestingPro Screener

I then scanned for companies whose InvestingPro ‘Profit’ and ‘Cash Flow’ grade was either ‘A’ or ‘B’. The Investing Pro grade benchmarks are an advanced stock ranking system that considers over 100 metrics pertaining to the company’s growth, profitability, cash flow, and valuation, and then compares companies against each other. The best performing companies on these metrics are the healthiest.

I then narrowed that down to companies with dividend growth streaks of at least a decade. And those names with Investing Pro ‘Fair Value’ upside greater than or equal to 10% made my watchlist. The fair value estimate is determined according to several valuation models, including price-to-earnings ratios, price-to-sales ratios, and price-to-book multiples.

Once the criteria were applied, I was left with a total of just 26 companies.

InvestingPro Screener

Of those, Hormel Foods (NYSE:HRL), and UnitedHealth Group (NYSE:UNH) were the two that stood out the most to me.

Hormel Foods

  • Year-To-Date Performance: -12.7%
  • Investing Pro Fair Value Upside: +16.5%
  • Dividend Growth Streak: 57 Years

Despite the recent downtrend in its stock, InvestingPro has flagged Hormel Foods — which is one of the world’s leading food processing companies — to provide significant long-term value for shareholders in the months ahead.

Demonstrating the strength and resilience of its business, Hormel sports a near perfect Investing Pro ‘Profitability Health’ score of 4/5. The Pro profitability score is determined by ranking the company on over 100 factors against other companies in the Consumer Staples sector.


The Austin, Minnesota-based packaged-food manufacturer has proven over time that it can sustain a slowing economy and still provide higher cash dividend payouts thanks to its dependently profitable business model that has successfully weathered plenty of storms in the past.

In fact, Hormel has raised its annual dividend for 57 consecutive years, and with the dividend payout ratio below 60% for the current fiscal year, the Dividend King will likely announce its 58th consecutive yearly hike in 2023. Shares currently yield 2.77%, which is soundly above the 1.56% implied yield for the S&P 500 index.

Based on its valuation metrics, I reckon that Hormel’s stock could be underrated by some investors who focus too much on the company’s near-term challenges.

HRL Daily Chart

Shares of the food products giant are down 12.7% year-to-date amid the negative impact of persistently high inflation and supply chain headwinds on its core business. Additionally, a recent avian flu outbreak has wreaked havoc within its Jennie-O Turkey segment.

However, these are just temporary headwinds in my view which are expected to dissipate in the months ahead.

At a price point under $40, HRL comes at an extreme discount according to the quantitative models in InvestingPro, which point to upside of 16.5% in Hormel’s stock from current levels over the next 12 months.

HRL Fair Value

Hormel, which has operations in more than 80 countries, is best known for producing a wide range of packaged and refrigerated foods. Some of the company’s most iconic brands include SPAM, Planters, Skippy, Columbus Craft Meats, and Jennie-O.

UnitedHealth Group

  • Year-To-Date Performance: -4.8%
  • Investing Pro Fair Value Upside: +10.6%
  • Dividend Growth Streak: 13 Years

UnitedHealth Group is the biggest U.S. health insurer and one of the largest healthcare conglomerates in the world, boasting a market capitalization of nearly $500 billion.

Shares have run hot in recent weeks, with UNH scoring a gain of 10% since reaching a mid-March low of $457.59, a level last seen in June 2022.

UNH Daily Chart

Based on InvestingPro data, UnitedHealth has several tailwinds that should fuel further gains in its stock in the coming months, with highlights including a pristine balance sheet and strong growth in free cash flow yields which should allow it to increase dividend payments.

Not surprisingly, the healthcare juggernaut has raised its annual dividend for 13 years in a row, highlighting its exceptional track record when it comes to returning cash to investors.

UNH Dividend Data

In a sign of how well its business has performed in the existing climate, UnitedHealth delivered better-than-expected Q1 earnings last week, driven by a strong performance in its Optum health-services segment and robust Medicare Advantage membership additions.

The diversified healthcare company reported adjusted Q1 profit of $6.26 per share, increasing 14% from $5.49 in the same period last year. Revenue jumped roughly 15% year-over-year to a record $91.9 billion, marking the fifth consecutive quarter of double-digit sales gains.

The upbeat results prompted the healthcare giant to lift its full-year 2023 earnings guidance to a range of $24.50-$25.00 per share from $24.40-$24.90 per share.

“Our strong, enterprise-wide growth this quarter is a direct result of our colleagues’ unwavering commitment to offering more health services to more people and connecting consumers with greater access to high-quality, affordable care,” CEO Andrew Witty said in the earnings release.

According to InvestingPro, the Minnetonka, Minnesota-based healthcare conglomerate has now topped Wall Street’s profit estimates for an astonishing 40 consecutive quarters, dating back to Q2 2013.

UNH Fair Value

All things considered, I believe UNH shares are well worth adding to your portfolio as they are still attractively valued and should offer further upside of 10.6% from Tuesday’s closing price, as per InvestingPro.

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