Dividend growth investing. It’s the gift that keeps on giving. Not only do high-quality dividend growth stocks literally pay you to own them, via the dividends they send to shareholders. But these stocks also routinely increase their dividends. It’s not just passive income. It’s growing passive income. Since inflation causes the costs of living to rise over time, you have to make sure your passive income can keep up and also grow. But a lot of high-quality dividend growth stocks are increasing their dividends at rates that exceed inflation. And that’s what today’s article is all about. Caterpillar just increased their dividend by 7.8%. Big Machines. Big dividend increases.

Caterpillar has been doing both very well for a very long time. They’re so reliable with this. The 7.8% dividend increase isn’t far off from their 10-year dividend growth rate of 9.1%. This marks the 28th consecutive year of dividend increases for the heavy machinery company. This is what makes high-quality dividend growth stocks so special. It’s that reliability. Bills are reliable. Very reliable. You want your dividend income to be just as reliable, if not more so. And when things are going up in price constantly, you also want to make sure your passive income is going up just as much, if not more so. Caterpillar delivers on both counts. This stock is up almost 80% over the last year. UnitedHealth just increased its dividend by 16%. With everyone freaking out about a recent inflation report that showed a 5% YOY increase in the CPI, UnitedHealth is boosting their dividend income to shareholders at three times that rate. Gotta love high-quality dividend growth stocks. This is the 12th consecutive year of dividend increases for the health insurance company. Surprisingly, this stock doesn’t have an overly demanding valuation. I wouldn’t say it’s cheap. But it’s not excessively valued. The P/E ratio is under 23. The five-year average is 21. You’re getting an above-average business here at a valuation that’s actually below the market average. And with its yield of 1.5%, it’s also kicking out some respectable income. Target just increased its dividend by 32.4%. Talk about bullseye.

Target is money. They’re providing the experience consumers want at the price level they demand. It’s really a great business. And this dividend increase makes the rising costs of life look like a pittance. The retailer has now increased its dividend for 54 consecutive years. If you’re thinking that more than 50 years into growing a dividend a growth slowdown is automatic, this 32.4% dividend increase shows you why you’d be thinking wrong. A company can only get into the position of growing a dividend for decades on end by being exceptional. So you should expect exceptional results. Speaking of exceptional, this massive dividend increase was almost three times higher than the stock’s own 10-year dividend growth rate of 12.3%. This stock is up – get this – 100% over the last year. Yeah, a double. In a year. On a supposedly boring ol’ retailer that you probably see every day.

This goes to show you that you don’t necessarily need to look for hidden gems. Great long-term investments are all around you. However, if you missed this train, it’s tough to jump on now. Every basic valuation metric for the stock is significantly higher than its respective recent historical average. It’s not as crazy as some of those Reddit stocks, but Target looks pricey. If there’s a sizable pullback, though, consider targeting Target.

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