Top Dividend Stocks: Comcast, Merck, UPS Offer Steady Income Growth

CHICAGO, Ill. – Income investors seeking reliable dividend growth may find compelling opportunities in Comcast, Merck, and United Parcel Service (UPS), according to a recent analysis by Morningstar DividendInvestor. These companies, known for their consistent dividend increases, are trading at discounts to their fair value estimates, offering attractive yields and long-term income potential.

Comcast, the telecommunications giant, initiated its dividend in 2008 and has raised its quarterly payout by $0.02 annually for the past six years. The company’s current annual dividend of $1.24 per share consumes less than 40% of its free cash flow, providing ample room for future increases. Morningstar analysts project the annual dividend will rise to $1.48 by 2028. Despite plans to spin off some cable networks, Comcast’s dividend remains secure, with the stock yielding 3.3% and trading at a 30% discount to its fair value estimate.

Merck, a leading pharmaceutical company, recently announced a 5.2% increase in its quarterly dividend for 2025, boosting its forward yield to 3.2%. Over the past five years, Merck has increased its dividend at an annualized rate of 8.3%. Morningstar expects the annual dividend, currently $3.24 per share, to grow to $3.96 by 2028. The company’s payout ratio of approximately 50% relative to adjusted earnings per share supports steady future dividends. Merck’s stock is trading at a 15% discount to its fair value estimate.

UPS, the global logistics leader, has raised its dividend at an impressive annualized rate of 12.2% over the past five years, driven by a significant 49% increase in 2022. While recent raises have been modest, Morningstar analysts remain confident in UPS’s ability to sustain its dividend, citing its strong financial position. The stock currently yields 5.2%, well above its five-year average of 3.4%, and is trading at a 15% discount to fair value. Analysts project the annual dividend will increase from $6.52 to $7.24 per share by 2028.

“These companies demonstrate the importance of dividend growth and financial stability for income investors,” said David Harrell, editor of Morningstar DividendInvestor. “Despite market fluctuations, their consistent payouts and discounted valuations make them attractive options for long-term portfolios.”