When you think of a great dividend stock to own, you’re probably thinking of one that yields a high rate of return. But focusing on yield alone can be a mistake. It can lead you down a path where you buy a stock with a risky payout, and you could overlook promising dividend stocks simply because their yields don’t look all that high right now.
Three stocks with yields that are less than 2% but that have been increasing their dividends at high rates in recent years include Eli Lilly (LLY -1.06%), TJX Companies (TJX -0.55%), and American Express (AXP -1.65%). Here’s a closer look at why these three underrated investment options could make for solid dividend stocks to buy and hold.
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1. Eli Lilly
Pharmaceutical company Eli Lilly is the big name behind GLP-1 drugs Zepbound (approved for weight loss) and Mounjaro (approved for diabetes). It has been reporting impressive results in recent years as its sales went from $28.5 billion in 2022 to more than $45 billion this past year.
While it does offer a yield of 0.8%, that may not grab the attention of dividend investors simply because it’s not hard to find higher-yielding payouts out there. The big reason its yield is so low, however, is because Eli Lilly has been such a red-hot stock to own. In five years, its stock price jumped by over 370% (returns as of July 7). As the share price goes up, the yield comes down.
And it’s not as if Eli Lilly hasn’t been generous when it comes to dividend increases. In December, the company announced it would be raising its dividend by 15%. It’s been raising its dividend by an average of 15% annually for seven years now. That’s an impressive rate of increase, and its current quarterly dividend of $1.50 has roughly doubled from the $0.74 that Eli Lilly paid shareholders back in 2020.
With a solid business and growing dividend, Eli Lilly is a stock that you may want to invest in for both its stock price growth prospects and rising payouts.
2. TJX Companies
Retailer TJX offers a higher yield than Eli Lilly, paying investors 1.4% per year, which is slightly above the S&P 500 average of 1.2%.
Although retail may not appear to be the best place to invest these days due to the threat of tariffs, off-price retailer TJX is doing well. By buying overstocked and otherwise unneeded products from other retailers, it can offer value to consumers amid challenging market conditions. And that appears to be evident in its most recent results. TJX’s revenue for its first quarter of fiscal 2026 (it ended on May 3) rose at a healthy rate of 5% versus the same period last year, with its top line totaling $13.1 billion.
The company’s confidence in its operations is also visible in a recent announcement where it said it would be increasing its dividend by 13% this year. It’s the 28th time in 29 years that it has raised its payout, during which the company says its dividend has averaged an annual rate of increase of 20%.
Those are impressive numbers for dividend investors and serve as a reminder of why TJX may make for a solid dividend growth stock to buy, despite what might at first glance appear to be an underwhelming payout.
3. American Express
Credit card company American Express pays out a modest 1% dividend yield. The company has been showing solid resiliency this year; through the first three months of 2025, its revenue net of interest expense totaled nearly $17 billion and rose by 7% year over year. Net income of $2.6 billion was up by 6%. Card member spending remained strong, and the company projects revenue growth of around 8% to 10% for the current year.
This bodes well for the company’s dividend, as it could result in continued generous rate hikes in the future. In March, American Express boosted its quarterly dividend by 12 cents, which represented an increase of 17% from its previous rate. At $0.82, the quarterly dividend today is 91% higher than the $0.43 it was paying its shareholders five years ago, which averages out to a compounded annual growth rate of 13.8%.
With strong financials and a high rate of dividend growth, American Express is a stock that income-seeking investors shouldn’t overlook today.
American Express is an advertising partner of Motley Fool Money. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TJX Companies. The Motley Fool has a disclosure policy.