Three dividend growth stocks recommended for investors

Investors often look for stocks that pay dividends as a way to earn returns. Research shows that dividends can significantly boost total returns over time. For instance, 85% of the S&P 500's returns since 1960 are linked to reinvested dividends. Companies that grow their dividends tend to perform better than those that do not. Experts recommend focusing on stocks with lower payout ratios, typically below 75%. These companies often have more financial flexibility to sustain or increase their dividends even during tough economic times. Here are three dividend growth stocks to consider. The first is Costco. This warehouse retailer has a strong membership model, which leads to loyal customers and consistent revenue. While Costco's current dividend yield is 0.51%, it has grown its dividend at an impressive rate of 12.6% over the past 10 years. Its payout ratio is a conservative 27%, allowing for future growth while also investing in new stores and online services. Next is Visa, a leader in payment processing. With a vast global network, Visa benefits from its large user base. Its business model yields high profits with minimal capital costs. Visa boasts a 17.5% dividend growth rate over the last decade and maintains a 21.7% payout ratio. As more people shift to digital payments, Visa is well positioned to continue growing. Lastly, American Express targets wealthy consumers with its premium brand and services. The company is expanding its network while maintaining excellent customer service. With a dividend yield of 1.24% and a 10.7% growth rate, it offers both current income and growth prospects. Its disciplined 20% payout ratio gives it room to increase dividends as it attracts younger consumers and small businesses. These companies are solid choices for investors seeking reliable growth and dividend income. They have strong business models, loyal customer bases, and the potential for continued success.