Let's face it. Dividend growth investing is tough. Not only do we need to pick stocks that have decent yields today, but we also need them to increase dividends in the future without a high degree of volatility when things go south.

I’m talking about companies with five-year returns exceeding 70%, five-year dividend growth rates that have at least doubled, and payout ratios that leave plenty of room for more increases down the line. 

Combine that with low volatility - so low you could sleep through a market crash, and out of thousands of stocks, only three made the cut.

In this article, I’ll walk you through my most brutal stock screener, the results that came out, and why there’s still lots of upside potential in these names.

How I Came Up With The Following Stocks

To get my list for today, I used Barchart’s Stock Screener tool and entered the following filters: 

• Number of Analysts: 8 or more. The more, the better.
• Annual Dividend Yield: I left this blank so I can arrange the list from highest to lowest.
• Dividend Payout Ratio: This tells us how much of the company’s net income goes to shareholders. The generally accepted “healthy” limit is 60%. I’m setting it to 30 to 60%.
• 5-Year Percent Change: 70% or more. I’m looking for stocks with at least 70% returns over five years.
• Current Analyst Rating: 4 to 5 (Moderate to Strong Buy) to get companies with a positive overall consensus.
• 5-Year Dividend Growth: 100% or more, to get companies that have increased dividends over the last five years.
• 60-Month Beta: I set this metric to 0 to 1. Beta tells us how much more or less volatile a stock is, compared with the broader market. A value less than 1 means they are less volatile.

After running the filters, I was left with five candidates, but I only needed 3. I sorted the list from highest to lowest dividend yield and identified my top 3 buy-and-hold dividend companies: Cenovus Energy Inc , ConocoPhillips, and Darden Restaurants.

Cenovus Energy Inc (CVE)

Cenovus is a Canadian oil and gas company based in Calgary, Alberta. It was founded in 2009 and significantly expanded after its acquisition of Husky Energy in 2021. And the result?

Today, Cenovus is one of the largest crude oil and natural gas producers in Canada, as well as one most successful refiners in the country. The company uses a steam-assisted gravity drainage process for extraction and is committed to achieving net-zero emissions from its oil sand operations by 2050.

For Q2 ‘25, Cenovus reported $8.9 billion of revenue, which was 18% lower compared to the same quarter last year. Meanwhile, its net income came in at around $615.3 million, also lower than the previous year quarter’s $730.7 million - bringing basic EPS down to $0.34, for the quarter.

That said, the company’s annual dividend is quite attractive for long-term investors. The forward dividend payout is CDN$ $0.80 per share (aprox USD $0.58) which translates to a forward yield of 3.9%. Payout ratio is also within a very acceptable range of around 50%.

In terms of growth, Cenovus' dividend has increased 268.75% over the past 5 years, which will please dividend growth investors. Moreover, the stock’s 60-month beta is just 0.97, giving investors a nice mix of stability and reliable income with this company.

Wall Street is also confident in the company. A consensus among 14 analysts reveals no sell ratings, just a single hold, and has been steady over the past 3 months. Right now, Cenovus has a “Strong Buy” rating with a high price target of $23.02, which suggests as much as 56.5% upside potential from its current levels.

ConocoPhillips (COP)

Next up is ConocoPhillips, another massive oil and gas giant. The company operates in two main areas: exploration and production. They search for new deposits and drill wells to extract oil resources. Most of their work happens upstream in the energy chain, meaning they focus on extraction rather than refining.

In terms of their latest quarterly financials, year over year, the company’s revenue rose 18% to $17.1 billion. Net income came in at $2.85 billion, which translates to an EPS of $2.23, also up 12% over the same quarter last year.

Conoco’s forward annual dividend is $3.12, which translates to a yield of around 3.37% - quite respectable today. The dividend payout ratio works out to around 40% of its earnings and over the past 5 years, the company has increased its dividend by 132.84%. 

Combining it with the stock’s 5-YR increase of 126.85% and a 60-month beta of 0.67, this translates to a stable stock that provides a reliable stream of income for investors. 

Wall Street agrees with this sentiment. COP stock has a consensus “Strong Buy” rating amongst 26 analysts. 23 of them rate the company a Buy or Strong Buy, while 3 rate it a Hold - there’s also not a single sell rating for this company. 

The highest price target is $137 per share, which means there could be as much as 48% upside potential from its current levels. In fact, the lowest target is $100, and since it trades at around $92 per share, Conoco stock is likely undervalued. 

Darden Restaurants (DRI)

The last but certainly not the least on this list of dividend growth companies is Darden Restaurants, which operates several well-known casual dining chains across the U.S. Its most popular brands include Olive Garden (breadsticks, anyone?), LongHorn Steakhouse, Cheddar’s Scratch Kitchen, and more. 

Darden focuses on full-service, sit-down restaurants where customers are served by friendly staff, rather than take-out places like fast food.

In its latest quarter, we saw the company’s revenue rise 10.6% to $3.27 billion compared to the same period last year. That said, net income declined a touch to $303.9 million from last year’s $308.1 million figure. That said, its EPS (basic) for the quarter increased $2.59 from $2.57.

On the dividend front, Darden Restaurants’ forward payout is $6 per share, which translates to a 2.9% yield. Its payout ratio is 58%, which is also healthy. In the past 5 years, the company has increased its dividend by 112.12%. Considering the stock’s 145.82% return over the same period and its 60-month beta of 0.75, Darden could be one of the most ideal dividend stocks to buy and hold.

Wall Street is also positive with Darden Restaurants. 28 analysts cover the stock - 18 of them currently issue “Buy” or “Strong Buy” ratings, while 10 rate the stock “Hold”. With this, the consensus for DRI stock is a “Moderate Buy” with a score of 4.21 out of 5. The highest price target is $255 per share, which could mean as much as 23.40% upside from its current levels. 

Final Thoughts

These three dividend companies are some of the most ideal options to consider for a buy-and-hold portfolio. They’ve exhibited significant growth in both their dividend yields and stock price. They’ve also proven to be more stable compared to the broader index, which means these investments have historically been less volatile during headwinds.

On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.