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One way to measure the quality of a dividend stock is by its dividend history. We believe stocks with established histories of dividend growth are more likely to continue growing their dividends moving forward. This is why we focus on groups of stocks with long histories of increasing their dividends. Investors can also look over the list of Dividend Contenders.

Here are 3 dividend stocks have strong business models and should continue to raise dividends for many years.

M&T Bank (MTB)

M&T Bank Corporation is a regional bank with branches in 12 states across the eastern U.S. from Maine to Virginia, and Washington D.C. The company has over 1,000 branches and employs more than 22,000 people. Almost half of M&T Bank’s loan book is composed of commercial real estate (47% of portfolio), with the remainder of loans consisting of consumer real estate (8%), commercial loans (29%), and consumer loans (16%).

For the first quarter of 2024, revenue declined 6.2% to $2.27 billion, but this was $10 million ahead of estimates. Adjusted earnings-per-share of $3.09 compared unfavorably to $4.09 in the previous year and was $0.03 below expectations. Average loans and leases of $133.8 billion grew 1.4% year-over-year and 0.8% sequentially.

Net interest margin of 3.52% was down 52 basis points from the same period a year ago and lower by 9 basis points from the fourth quarter of 2023. Total deposits increased 5% to $167.2 billion, and noninterest expense of $1.4 billion was up slightly from the same period a year ago.

The company has compounded at 9% annually over the last decade. We feel a growth rate of 6% is appropriate given the lateness of the cycle and the fact that the company's earnings-per-share rate started at a high base.

The bank is expected to have a very low payout ratio going forward, leaving the company plenty of room to pay its dividend and to offer the potential for payout growth. The stock yields 3.6%.

Baxter International (BAX)

Baxter International develops and sells a variety of healthcare products, including biological products, medical devices, and connected care services devices used to monitor patients. Its products are used in hospitals, kidney dialysis centers, nursing homes, doctors’ offices, and patients at home under physician supervision. Baxter International has paid dividends to shareholders for 32 consecutive years.

On May 2, 2024, Baxter International reported first quarter earnings results for the period ending March 31, 2024. For the quarter, revenue grew 2.3% to $3.6 billion, which was $40 million more than expected. Adjusted earnings-per-share of $0.65 compared favorably to $0.59 in the prior year and was $0.04 ahead of estimates.

Starting with Q3 2023, the company now has four reportable business segments. As with previous quarters, most businesses within the company showed year-over-year growth. Excluding the impact of currency exchange, Kidney Care revenue was up 4% to $1.1 billion

The adjusted gross margin expanded 170 basis points to 40.8%. Baxter provided updated guidance for 2024 as well. The company now expects adjusted earnings-per-share in a range of $2.88 to $2.98, up from $2.85 to $2.95 previously.

The company’s low projected payout ratio of ~40% makes us believe that the dividend is safe and will continue to grow alongside the 10% projected earnings-per-share growth. Baxter offers recession resiliency, as seen by the company’s steady growth in sales and operating income during the Covid-19 pandemic.

Baxter has competitive advantages due to its large R&D spend that allows the company to stay ahead of its competitors.

Nutrien Ltd. (NTR)

Nutrien Ltd. is a Canadian company formed through Agrium and PotashCorp's merger in a closed transaction on January 1, 2018. The company produces and markets crop nutrients to agricultural, industrial, and food industry customers worldwide. Nutrien has over 1,700 retail locations in North America, South America, and Australia, and is one of the world's largest manufacturers and suppliers of potash, nitrogen, and phosphate. Nutrien provides over 20% of the global market on potash, 3% nitrogen, and 3% phosphate.

On May 8, 2024, Nutrien reported its first quarter results for Fiscal Year (FY)2024. The company reported first quarter 2024 net earnings of $165 million, or $0.32 per diluted share, and an adjusted EBITDA of $1.1 billion, with adjusted net earnings per share at $0.46. The Retail segment's adjusted EBITDA rose to $77 million due to higher gross margins for crop nutrients and crop protection products, supported by strong grower demand.

Nutrien maintained its 2024 guidance ranges, expecting growth in Retail earnings and fertilizer sales volumes. Retail adjusted EBITDA is projected between $1.65 billion and $1.85 billion, driven by higher sales volumes and margins in North America and improved crop input margins in Brazil.

Share buybacks are another EPS growth catalyst. Share repurchases are expected to contribute several percentage points per year on top of baseline growth. Nutrien repurchased approximately 8% of its market capitalization in 2023. The stock currently yields 3.5%.

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