My Top Dividend Growth Stock to Buy in October and Hold Forever
Key Points
Church & Dwight is a solid dividend growth stock, with 30 consecutive years of dividend increases.
Seven power brands, including Arm & Hammer and OxiClean, drive 75% of sales and profits.
It offers a modest yield of 1.26% and has ample room to grow the dividend.
Church & Dwight (NYSE: CHD) is my top dividend growth stock to buy in October and hold forever. It owns many household and personal-care brands that people buy every day -- and that helps support steady financial results. Among these brands are Arm & Hammer and OxiClean. It has increased its dividend for 30 consecutive years.
Here's why this is a great stock to buy for investors more interested in dividend growth and not a high yield.
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Church & Dwight is built for long-term compounding
Church & Dwight relies on seven power brands, including Arm & Hammer, Batiste, Waterpik, OxiClean, Therabreath, Hero, and Touchland. These brands drive about 75% of sales and profits.
The growth of private-label brands has created more competition for established brands in recent years. But only 5% of Church & Dwight's product categories face private-label competition. Over the last five years, its revenue has grown at an annualized rate of close to 5%. The company has also benefited from investments in e-commerce. Its online business has grown dramatically from just 2% of sales in 2016 to 25% in 2026.
In its second-quarter earnings report, management raised full-year organic sales guidance to 4% to 5% year over year, consistent with its long-term target of 4% organic growth.
Management is also targeting 8% annual growth in adjusted earnings. This should be supported by productivity initiatives, profitable acquisition opportunities, and occasionally selling brands that don't meet its return threshold, such as the 2025 sale of its VitaFusion and L'il Critters businesses.
A 1.26% yield that can double in 10 years
Church & Dwight declared its 502nd quarterly dividend on July 29. The quarterly dividend payment is $0.3075 per share, bringing the stock's forward yield to 1.26% as of Oct. 7 -- slightly above the S&P 500 average of about 1%. It's not a high-yield stock, but it has a strong growth record. The dividend has grown at a compound annual rate of 4% over the past five years.
The dividend could grow at a higher rate. The payout ratio is 39% over the past year, leaving ample room for continued increases. If the company delivers on management's 8% long-term earnings growth target, and the dividend grows accordingly, investors could see the dividend roughly double over the next 10 years. That means investors buying shares today could earn about a 2.6% yield in 10 years on their cost basis.
The company also maintains a strong balance sheet, with a debt-to-equity ratio of just 0.56 as of Q2 2026. That implies its debt is roughly half of shareholders' equity (assets minus liabilities), which is a healthy financial position for a consumer staple.
For these reasons, Church & Dwight is my top stock to buy right now if you're looking for a rock-solid business with attractive dividend growth prospects. As long as Church & Dwight's power brands are winning customers, the stock will be a rewarding, long-term investment.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.