Top Dividend Growth Stocks for September 2026 | Free List from AAII

AWK , FDS , LDOS , MKC , TGT

Dividend stocks with high yields aren’t always good investments, strong dividend stocks combine reliable income with solid fundamentals and long-term growth potential, not just a high payout. The challenge is identifying these companies before they’re widely recognized and their share prices already reflect that popularity.

This guide answers:

• How do you evaluate a dividend stock? Using yield, dividend growth rate, and financial health indicators together, not yield alone.
• Why does dividend growth matter more than dividend yield? A rising dividend signals financial strength and compounds income over time, while a high static yield can signal a company in distress.
• How do you use AAII’s Dividend Stock List to find opportunities? By applying AAII’s screening criteria such as profitability, financial strength, and dividend track record you can identify strong contenders.

AAII’s Dividend Stock List for September 2026 is a strong starting point, but knowing the core principles of dividend investing is what helps you apply it well and adapt it as market conditions change. This article explains what makes a dividend stock strong, how to evaluate one using AAII’s proven criteria, and how to put the September 2026 list to work in your own portfolio.

Fill out the form below with your information to download our FREE top dividend stock ideas list for this month.

What Are Dividend Stocks?

Dividend stocks are shares in companies that regularly distribute a portion of their profits to shareholders. These payments are called dividends and are usually paid quarterly, though some companies pay annually or semiannually. Dividend stocks appeal to investors because they combine two benefits: a reliable income stream and the potential for the stock price to appreciate over time.

What Is Dividend Yield?

Dividend yield is the annual dividend payment a stock pays, divided by its current share price, expressed as a percentage. It tells you how much income you’re earning relative to what you’d pay for the stock today.

• Formula: Dividend Yield = (Annual Dividend Per Share ÷ Share Price) (AWK) 100
• Example: A stock paying a $4 annual dividend at a $100 share price has a 4% dividend yield. If that same stock’s price drops to $80 while the dividend stays at $4, the yield rises to 5%, not because the company got more generous, but because the stock got cheaper.

That example points to the core risk with using yield alone: a high yield can signal opportunity, or it can signal trouble. Yields often spike when a stock’s price falls sharply due to declining business fundamentals, an unstable payout the company may soon cut, or broader financial distress, a pattern known as a "yield trap." A rising yield driven by a falling share price looks identical, on paper, to a rising yield driven by dividend growth, but the two mean very different things for your investment.

That’s why yield should never be evaluated in isolation. A reliable dividend stock pairs its yield with consistent dividend growth, healthy earnings, and manageable debt, indicators that the payout is sustainable and likely to increase over time, not just high today.

How Do You Know Which Dividend Stocks to Buy?

Green flags to look for:

• Continuous dividend growth — a company raising its dividend year after year signals financial strength
• Strong cash flow — healthy cash flow supports the ability to maintain or grow dividends
• Low payout ratio — a sustainable ratio means the company isn’t overextending itself to pay shareholders

Red flags to avoid:

• Dividend cuts — reducing or suspending payments signals financial instability
• High debt levels — heavy debt burdens can force a company to cut its dividend
• Declining earnings — a downward earnings trend may mean future dividends aren’t sustainable

Can You Live Off Dividends?

Yes, but it requires careful planning and a sizable, well-diversified portfolio. The key is prioritizing dividend growth over just chasing yield. Investors often build this kind of portfolio around Dividend Aristocrats and Dividend Kings — companies with decades-long track records of dividend increases — to create the income stability needed for long-term financial security.Are Dividends Taxed?

Yes, dividends are subject to taxation when received in a taxable brokerage account. The tax rate varies based on whether the dividends are qualified or ordinary. Qualified dividends are taxed at a more favorable long-term capital gains rate, while ordinary dividends are taxed at your higher regular income tax rate. Be sure to consider the tax implications of dividend income when building your portfolio.

Are Dividends Taxed?

Yes. Dividends held in a taxable brokerage account are subject to tax, and the rate depends on the type:

• Qualified dividends are taxed at the lower long-term capital gains rate
• Ordinary dividends are taxed at your regular income tax rate

Understanding this distinction matters when building a tax-efficient dividend portfolio.

Dividend Growth vs. High Yield: Which Is Better?

While a high dividend yield may seem attractive, dividend growth is often a more reliable indicator of a company’s future performance. A consistently growing dividend suggests that the company has strong earnings and a commitment to returning value to shareholders. High-yielding stocks, on the other hand, can be risky, since the high yield may indicate investors perceive potential problems with the company.

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Pros and Cons of Investing in Dividend Stocks

Dividend stocks can be a valuable part of a long-term investment strategy, but like any investment, they come with both benefits and drawbacks. Here’s a quick look at the key pros and cons to consider.

Pros

• Steady Income: Dividend stocks provide regular income, which can be especially beneficial for retirees.
• Lower Risk: Established dividend-paying companies are often more stable and less volatile than younger companies.
• Tax Benefits: Qualified dividends are taxed at a lower rate than ordinary income.

Cons

• Slower Growth: Stocks of companies that don’t raise their dividends may realize lower returns compared to growth stocks.
• Dividend Cuts: Companies can reduce or eliminate dividends, especially during economic downturns.
• Tax Considerations: Dividend income may still be subject to taxation, which can reduce overall returns.

Are Dividend Stocks Risky?

Like any investment, dividend stocks carry risk mainly from dividend cuts, market volatility and shifting economic conditions. Choosing companies with a strong history of dividend increases and solid financial health helps reduce, though not eliminate, these risks.

The Role of Dividend Stocks in Retirement Portfolios

Dividend stocks play a critical role in retirement planning by offering both income and capital preservation. Unlike bonds, high-quality dividend stocks can provide growing income that helps offset inflation. Retirees often favor dividend-paying companies for their reliability and the potential to live off portfolio income without depleting principal.

What Are Dividend Aristocrats and Dividend Kings?

Dividend Aristocrats are companies that have increased their dividends for 25 consecutive years or more, while Dividend Kings have achieved this feat for 50 consecutive years. These companies are often seen as the gold standard in dividend investing, offering stability and a proven track record of rewarding shareholders.

How to Use AAII’s Dividend Grades to Analyze Potential Stocks

AAII provides dividend grades based on key metrics. The Dividend Valuation, Growth and Strength Grades help investors assess a stock’s potential for both current income and future growth. For example, a stock with an “A” grade for Dividend Growth is likely to see its dividends increase over time, while a lower grade might signal potential instability.

How to Best Use AAII’s Dividend Stock List for Fall 2026

AAII’s Dividend Stock List for September 2026 highlights companies with strong financials, reliable dividend histories, and future growth potential — making it a solid starting point for research. It should be used as one part of a broader strategy; always verify market conditions, company fundamentals, and portfolio diversification independently.Looking for consistent dividend growth in an unpredictable market?

Our September 2026 Dividend Growth Stock List highlights standout companies known for steadily increasing their payouts and it’s free to download.

A few familiar names earned a spot on the list as of September 4, 2026:

• FactSet Research Systems Inc. (FDS)

•  American Water Works Company, Inc. (AWK)

• Target Corporation (TGT)

• McCormick & Company, Incorporated (MKC)

• Leidos Holdings, Inc. (LDOS)

To get the full list of dividend growers we’ve identified this month, fill out the form below to receive our list of top dividend stock ideas for September 2026, completely free!

Key Takeaways: How to Find Strong Dividend Stocks

The strongest dividend investments aren’t the ones with the highest yield, they’re the ones backed by consistent dividend growth, healthy cash flow, and manageable debt. A high yield alone can just as easily signal a company in trouble as it can signal a genuine opportunity. The companies most likely to reward long-term investors are those with a track record of raising their payouts year after year, not just maintaining them.

That’s exactly what AAII’s grading system is built to surface. Each stock on AAII’s September 2026 Dividend Stock List is scored across Dividend Valuation, Growth, and Strength, so you can see at a glance whether a company’s yield is backed by real financial health or built on shakier ground.

A few examples from this month’s list show why grades matter as much as yield:

• Intuit Inc. (INTU) earns top marks across all three dividend grades, reflecting a business with strong earnings growth to support future increases, even with a modest current yield.
• McCormick & Company (MKC) combines a nearly 3.7% yield with top grades in valuation, growth, and strength, a rare pairing that signals both income and sustainability.
• T. Rowe Price Group (TROW) stands out with one of the highest yields on the list at 4.7%, backed by decades of consistent dividend payments.
• Donaldson Company (DCI) shows how a moderate yield paired with strong growth and strength grades can outperform flashier, higher-yielding names over time.

Performance as of September 4, 2026.

These are just a handful of the names AAII’s proprietary screening identified this month, evaluated the same way we’ve outlined throughout this guide: by weighing yield against growth, financial strength, and long-term sustainability, not yield in isolation.

For those seeking a more in-depth approach to dividend investing, consider checking out AAII Dividend Investing and AAII Platinum.

Choose between 30 days of AAII Dividend Investing for just $2 OR a full month of premium access to AAII Platinum for just $3.

AAII Platinum includes access to A+ Investor, Dividend Investing, Growth Investing, Retirement Investing, Stock Superstars Report and VMQ Stocks, providing you with expert insights and tools to help you build a diversified portfolio with confidence.

Always remember that successful investing is based on research and strategy — so get started today!

AAII Disclaimer

AAII is not a registered investment adviser or a broker/dealer. Readers are advised that articles are provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities. The opinions and analyses included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or any delay or interruptions in the transmission thereof to the users. All investment information contained herein should be independently verified.

Past performance is no guarantee of future results. Investment information provided may not be appropriate for all investors. Investment information is provided without consideration of your financial sophistication, financial situation, investing time horizon, or risk tolerance. Readers are urged to consult with their own independent financial advisers with respect to any investment.

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