2 High-Yield Dividend Growth Stocks to Buy in October and Hold for a Decade or Longer

Key Points

• Watsco and Amgen both offer dividends that are more than double the benchmark average.

• Amgen's a well-established biotechnology company with lots of new products pushing up sales.

• Watsco is America's largest distributor of heating, ventilation, air conditioning, and refrigeration parts.

• 10 stocks we like better than Watsco ›

There are a million and one ways to put your money to work on Wall Street. It might surprise you to learn that investing in dividend growth stocks isn't just one of the easiest; it's also one of the most effective.

Between 1973 and 2024, shares of companies in the benchmark S&P 500 index that grew or initiated a dividend produced a 10.24% average annual return. Stocks that didn't offer a dividend produced a measly 4.31% average annual return over the same time frame, according to Ned Davis Research and Hartford Funds.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Watsco (NYSE: WSO) and Amgen (NASDAQ: AMGN) have been cranking up their quarterly dividend payouts. Despite a terrific run, they offer yields that are more than double the benchmark average. Here's how they could keep outperforming for patient investors in the decade ahead.

Image source: Getty Images.

1. Watsco

The market for heating, ventilation, air conditioning, and refrigeration (HVACR) parts and supplies is highly fragmented. This is working out well for Watsco, America's largest HVACR parts distributor, and its shareholders. The company has been able to raise its dividend payout by 69% over the past five years. At recent prices, it offers a 2.8% yield.

Watsco has grown rapidly by acquiring over 70 businesses in the fractured distribution market and building relationships with manufacturers. Best of all, it generally completes acquisitions with profits instead of debt. At the end of June, there was no debt on its balance sheet.

Watsco isn't just relying on industry consolidation to grow its business. It also has increasingly popular online applications that contractors use to facilitate the quote process and order parts. At the end of June, there were 70,000 mobile app users with an e-commerce account.

In April, Watsco raised its dividend by 11% but the stock is down recently because sales contracted. Total revenue is down by 3% in the first half of 2025. The company blames temperate weather and lower homebuilding activity. The Federal Reserve can't do much about the weather, but interest rates that just dropped 0.25%, and further reductions expected soon, could boost new home construction.

If we're entering a general economic slowdown that pressures new construction, Watsco's investors don't have to get too nervous. Much of the company's sales come from contractors repairing and replacing HVAC units that are already installed. Buying this stock on the dip in October and holding through the decade ahead looks like a smart move.

2. Amgen

About the only thing more reliable than HVACR sales are sales of prescription drugs. Few of us get to choose when we need expensive treatments from companies like Amgen. As one of the oldest biotechnology businesses around, it's established enough to apply big pharma's tactics for avoiding patent cliffs.

Second-quarter sales of Enbrel, an arthritis treatment that first earned approval in 1998, declined by 34% year over year to an annualized $2.4 billion. Individual drug patents eventually expire, but Amgen has wisely invested past profits.

Amgen has invested Enbrel profits into its next generation of blockbusters and rapid dividend raises. The company raised its payout by 48% over the past five years. At recent prices, its shares offer a 3.4% yield that could grow by an even faster pace in the years ahead.

In the second quarter, Amgen reported sales growth at a double-digit percentage for 15 products. Overall sales grew by 9% year over year to $8.8 billion.

Investors can look forward to more growth from Imdelltra, Amgen's new small-cell lung cancer treatment, in the years ahead. In the Dellphi-304 trial, treatment with Imdelltra reduced patients' risk of death by 40% compared to standard chemotherapy.

First approved in 2024, Imdelltra is used to treat patients after they've failed their first round of chemotherapy. With such strong results among second-line patients in the Dellphi-304 trial, it could eventually become standard care for newly diagnosed patients, too.

With Imdelltra and more than a dozen other drugs pushing up total sales, there's a good chance that Amgen could continue raising its payout at a rapid pace for another decade or longer. Adding some shares to a diversified portfolio now looks like a great way to pump up your passive income stream.

Should you invest $1,000 in Watsco right now?

Before you buy stock in Watsco, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Watsco wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $646,567!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,143,710!*

Now, it’s worth noting Stock Advisor’s total average return is 1,072% — a market-crushing outperformance compared to 191% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 29, 2025

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen and Watsco. The Motley Fool has a disclosure policy.