Morgan Stanley has identified several companies demonstrating strong dividend growth, suggesting potential for future stock appreciation. These companies, which have increased their dividends by at least 15% quarter-over-quarter in the past year, may offer a stabilizing influence in the current volatile market.
Notable mentions include East West Bancorp, Packaging Corporation of America, and Devon Energy, each offering attractive dividend yields and analyst-backed upside potential.
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As September unfolds with its typical market volatility, investors seeking stability might find solace in dividend-paying stocks. Morgan Stanley has highlighted several companies demonstrating robust dividend growth, suggesting potential for future stock appreciation.
The S&P 500 has seen a modest gain early in the month, but recent market fluctuations driven by Treasury yields, oil prices, and Federal Reserve interest rate decisions have created a challenging environment. In such times, dividend stocks can offer a crucial buffer, providing a reliable income stream and signaling corporate confidence.
According to a recent Morgan Stanley report, companies that have increased their dividends have historically seen their stock prices outperform by an average of 3.1% in the six months following the announcement. To identify these opportunities, the firm screened the Russell 1000 index for companies that have raised their quarterly dividends by at least 15% year-over-year within the past 12 months.
Featured Dividend Growth Stocks:
- East West Bancorp (EWBC): This California-based bank raised its quarterly dividend by 20% in January to 80 cents per share. The stock has gained 16% year-to-date in 2026 and offers a 2.4% dividend yield. East West Bancorp's second-quarter earnings and revenue surpassed analyst expectations, and the bank revised its full-year net interest income growth forecast upward. A significant majority of analysts covering the stock recommend a buy or strong buy, with an average price target suggesting 13% potential upside.
- Packaging Corporation of America (PKG): Morgan Stanley also pointed to Packaging Corporation of America, which boasts a 2.5% dividend yield and is up 15% year-to-date. The company increased its quarterly dividend by 20% in May, bringing the annual payout to $6 per share. More than half of the analysts covering PKG rate it as a buy or strong buy, with consensus price targets indicating an approximate 7% upside.
- Devon Energy (DVN): Identified as Morgan Stanley's top pick in the energy sector, particularly as oil prices approach $100 a barrel. The firm favors integrated energy companies with strong refining exposure and select exploration and production (E&P) companies showing positive momentum. Devon Energy, which also recently appeared on Goldman Sachs' list of undervalued dividend-paying energy stocks, offers a 2.3% dividend yield and has risen 31% year-to-date. The company approved a 33% dividend increase in May to 32 cents per share. Nearly all analysts covering Devon recommend a buy, with consensus price targets implying nearly 23% upside.
Other notable companies recognized for consistent dividend growth include Nvidia, Royal Caribbean, and Capital One Financial.
