5 dividend growth stocks that Fools believe can deliver a productive fortune

A dividend-growth stock refers to a company's stock that not only pays dividends to its shareholders but also has a history of increasing the value of those shares over time.

The ability to consistently increase dividends is often seen as a sign of a company's financial health and stability, suggesting that it is generating growing profits and has a positive outlook for the future.

We asked five freelance writers for their top British assignment suggestions that meet this criteria right now!

Bunzl

What it does: Bunzl offers a wide range of valuable products through around 150 companies worldwide.

Written by Royston Wild. The key to successful dividend investing is finding stocks that can provide a sustainable and growing dividend over time. In my opinion, FTSE 100– it's on the list Bunzl (LSE:BNZL) is one of the top performers on the London stock market.

The support services business has raised annual dividends for 31 consecutive years. Moreover, they have grown at a healthy annual growth rate of nearly 10% during that period.

With Bunzl's share price also up nearly 2,300% in that time, investors who bought in the early 1990s would be sitting on a lot of money right now.

The company's strong performance is largely down to its profitable acquisition-based growth strategy. Encouragingly, it has shown the appetite (and more importantly the balance) to continue this highly successful approach, too.

It has spent £468m on 19 more acquisitions in 2023 alone. This is a company with great long-term investment opportunities, in my opinion.

Royston Wild has no shares in Bunzl.

Dunelm team

What it does: Dunelm is a home goods retailer selling through a network of UK stores and online, with a focus on value and choice.

Written by Roland Head. Dunelm team (LSE: DNLM) doesn't get many headlines in the investment press, but I rate this family-run business as one of the best retailers in the UK.

Double-digit profit margins and a light business model mean that Dunelm makes a very high return on investment. This translates into more cash flow to support larger dividends.

Dunelm's common stock has grown by an average of 16% per year since its inception in 2006. The company usually pays special one-time benefits.

I often find that family ownership is a sign that the business is run to deliver long-term sustainable returns. I believe that is true here.

Dunelm's sales may take a hit during the recession. I think there is also an increase in risk that will slow down as the business grows.

However, the valuation looks reasonable to me at the moment, with a projected dividend yield of around 4.5%. I plan to be a long-term owner.

Roland Head is a shareholder in the Dunelm Group.

Games Workshop

What it does: Games Workshop designs and manufactures miniatures and tabletop wargames, incl Warhammer 40,000.

Written by Ben McPoland. Games Workshop (LSE: GAW) is the creator of many fantasy worlds loved by millions. The stock also offers the best of both worlds in terms of growth and dividends.

As the company says, “We return our balances to our owners and try to do so in increasing amounts.” The dividend yield is 4%, which is great considering that the share price has more than doubled in the last five years.

On July 30, the company reported the best annual results in its history. Received record sales, salaries, dividends, and employee benefit dividend payments. Currently, it is being finalized “creative guidelines” to bring it Warhammer 40,000 the whole place to Amazon Prime. A hit series of films and television shows can be a powerful driver of growth for Games Workshop.

Another risk highlighted by the company is its IT heritage system, which “it ends up randomly annoying us and causing temporary problems for us and our customers“. These order processing problems could halt its growth plans until it replaces the old systems.

Long term, I think a combination of rising dividends and continued dividend growth can help create wealth for shareholders.

Ben McPoland is a shareholder in Games Workshop.

Legal & General

What it does: Legal & General is a UK-based financial services provider specializing in retirement products

Written by Christopher Ruane. A company that has announced plans to reduce its annual profit growth rate may not sound like a promising option for trying to build productive wealth.

But I still see two reasons to like the income view Legal & General (LSE: LGEN). First, slow growth is still growth. Second, with a current dividend yield of 8.8%, the FTSE 100 share is already a net income earner.

The dividend is expected to grow by 5% this year and 2% in the next few years. Even if the 2% rate lasts for decades, if I buy shares today, my investment will hopefully yield more than 13% per year for twenty years. years now.

Whether that happens depends on the company's business performance: profits are not guaranteed. Legal & General cut its payout during the last financial crisis. There is always the risk of volatile markets leading customers to withdraw funds.

But I like its large customer base, high long-term demand and strong product.

Christopher Ruane is a shareholder in Legal & General.

National Grid

What it does: National Grid operates the UK and USA power distribution networks.

Written by Alan Oscroft. When it comes to manufacturing wealth, we need to focus on companies that can continue to do so for decades to come.

That's why I choose National Grid (LSE: NG.).

The powerful crop of weather forecast classification seems hard to ignore. Analysts see them staying strong in the coming years, although starting to slow down in 2025.

This is where National Grid's dividend may look less golden than ever. The company's recent share issue diluted earnings per share. And once it's done, there should be a chance the company can do it again.

But the issue of equity is about the growth of the coin. The company needs to expand and update its networks, as the demand for electricity from renewable sources looks set to continue to rise. And that means more costs.

I see more risk than usual on National Grid now. But for the long term, I rate it as one to consider for generations to come.

Alan Oscroft has no position on National Grid.