3 Dividend Increases Investors Can Actually Trust

Key names across the healthcare and industrial sectors recently announced notable dividend increases. Importantly, all three of these firms are not overextending themselves with their dividend payments. Their latest earnings and guidance more than cover planned dividends, providing a path toward sustainable shareholder returns going forward.

UnitedHealth Group’s Yield Approaches 2.5% With Recovery Underway

UnitedHealth Group (NYSE: UNH) stands as the leading health insurance provider in the United States. The stock has rebounded nicely in 2026, up more than 20% after falling 33% last year. The company’s adjusted earnings per share (EPS) dropped around 41% year over year (YOY) in 2025 to $16.35. This came as medical expenses increased significantly relative to its collected premiums. However, the company is seeing some relief. UnitedHealth Group has increased its full-year adjusted EPS guidance for 2026 to more than $18.25, implying YOY growth of 12% or more.

Even as adjusted EPS plummeted in 2025, the firm recently boosted its quarterly dividend by 5% to $2.32. Overall, the stock now holds an indicated dividend yield of 2.45% and is on track to deliver a full-year dividend of $9.28. The record date for its new dividend was June 15. However, with a 15-year track record of dividend increases, investors are very likely to receive this higher dividend in future quarters.

Additionally, UnitedHealth’s expected payout of $9.28 should be easily covered by its expected adjusted EPS of $18.25 or more. These factors signal that, despite UnitedHealth Group being in recovery mode, investors can have confidence in a solid dividend going forward.

Caterpillar: Top Pick-and-Shovel AI Stock Boosts Dividend 8%

Heavy equipment giant Caterpillar (NYSE: CAT) stock has been on an absolute tear, delivering a total return of 60% in 2025 and now up more than 50% in 2026. This comes as Caterpillar has been a clear winner amid the artificial intelligence boom. Caterpillar’s reciprocating engines have been a particularly successful product line. These provide backup power to data centers and have also seen interest as primary power solutions. Notably, since January 2024, the company’s large reciprocating engine backlog has increased by more than 3.5 times.

Additionally, Caterpillar has issued a significant 8% dividend increase, moving its payout to $1.63. By comparison, Caterpillar generated adjusted EPS of $5.54 in Q1 2026, putting its dividend in very sustainable territory. The stock’s indicated yield now sits near 0.76%, with its next dividend payable on Aug. 19 to shareholders of record as of the July 20 close. Caterpillar's dividend increase streak now extends to 30 years.

Overall, Caterpillar clearly isn’t a high-yield stock, with returns coming through big-time share price appreciation. Amid this, Caterpillar’s elevated valuation is important to consider. Caterpillar currently trades at a forward price-to-earnings (P/E) ratio near 36x, around 80% above its 20x average over the past three years.

Donaldson Issues Solid Dividend Increase After Record Quarter

Industrial company Donaldson (NYSE: DCI) specializes in filtration systems. The stock is flat to slightly down in 2026 after coming off a 33.7% gain in 2025. Donaldson is benefiting from data center buildouts on a variety of fronts. This includes its disk drive filters, as well as filters used in natural gas turbines that power many data centers. The company noted that its latest quarter was its strongest to date, with revenue reaching a record $995 million.

Donaldson has also increased its dividend by 6.7%, moving its quarterly payout up to 32 cents per share. Notably, Donaldson’s adjusted EPS was more than three times this level in its latest quarter at $1.06, leaving its payout well supported. Despite a June 15 record date, Donaldson’s 38-year track record of dividend increases makes this $1.06 payment highly unlikely to fall in future quarters.

The stock now has an indicated dividend yield near 1.6%, giving Donaldson a modest, but still meaningful dividend return. When thinking about data center exposure, Donaldson is not a “pure play” name. While it is seeing real data center-driven demand, the company also plays in many other areas. Donaldson’s mobile solutions segment is by far its largest, contributing around 63% of revenue last quarter. In this segment, the company provides air and other filtration systems for large vehicles and equipment, with a particularly strong focus on replacement filters.

UnitedHealth Stands Out as Targets Rise and Care Ratio Improves

The MarketBeat consensus price target for UnitedHealth Group sits near $407, suggesting markets are fairly valuing the stock. However, UnitedHealth Group has seen a substantial number of price target increases as of late, with targets updated in June averaging approximately $454. Improved medical cost trends are one source of this shift.

Looking forward, a key metric for investors to monitor is UnitedHealth’s medical care ratio. The ratio measures how many dollars the company paid in medical expenses per dollar of premiums collected. A lower figure is better, translating to higher profits for the company. The company saw its medical care ratio fall by 90 basis points YOY in its latest quarter to 83.9%. Further YOY improvements would signal continued progress in UnitedHealth’s recovery.

Companies Mentioned in This Article: