Investors looking to earn income and keep pace with inflation should turn to dividend-growth stocks, according to investor Kevin Simpson. Dividend stocks in general should get a boost from the Federal Reserve ‘s rate-cutting cycle, he said. As yields come down in bonds, dividend payers begin to look relatively more attractive to income investors. The central bank is set to meet next week and the market is pricing in 99% odds of another rate cut. It meets again in December, when it is also expected to decrease rates. Yet not all dividend stocks are created equal. Simpson, founder and chief investment officer of Capital Wealth Planning, prefers those that consistently grow their payouts. He said his thesis is a simple one: find companies that are increasing earnings, which should cause their stocks to appreciate over time. “If we have companies that are increasing their earnings, and therefore have the ability to increase their dividends, then we think we’ve got a real hedge against inflation,” he said. “When we’re seeing dividend growth, we’re seeing an increase, essentially, in our cash flow. Effectively, we’re getting a raise each and every year.” Here are three of Simpson’s top picks right now. They are companies that are increasing earnings, boosting dividends and their stocks have been trending higher over the years, he said. Apple continues to prove its durability, with an ecosystem that remains unmatched and a transition into artificial intelligence that will add a new leg of growth for the next hardware cycle, Simpson said. “Despite being a mega-cap, Apple’s balance sheet strength, cash flow, and loyal customer base give it the ability to navigate slower iPhone cycles and still return capital to shareholders through buybacks and dividends,” he said. Apple’s iPhone 17, which was released in September, is seeing better-than-expected sales . It outsold the iPhone 16 series by 14% within the first 10 days of availability in the United States and China, according to Counterpoint research data . Although Apple doesn’t pay a big dividend, the company has a three-year dividend-growth rate of 13.1%, Simpson said. The stock currently yields 0.40% and is about 4% year to date. Coca-Cola , which has a 2.88% dividend yield, is another household name in Simpson’s portfolio. It has a three-year dividend-growth rate of 4.9%, he said. While it may be “boring,” it’s a high-quality stock that is built to weather storms. Despite a tough macro backdrop, the beverage company recently reported an earnings and revenue beat for its third quarter. “Their pricing power, global footprint and ability to keep the engine humming give investors a compelling combination of growth and reliability,” Simpson said. “In a world where volatility is the norm, KO tends to buck the trend: You’re getting a great brand, global reach, margin upside and a dividend you can depend on.” Shares of Coca-Cola have gained 12% so far this year. Lastly, RTX is another name that recently reported third-quarter earnings and revenue that topped expectations . It also raised its full-year guidance. The aerospace and defense company seems to be “firing on all cylinders” amid its backlog growth and across-the-board momentum, Simpson said. “In a world where defense budgets are soaring and aerospace is really regaining traction, this is a company that’s not just riding the wave — it’s building the wave,” he said. “If you want a play that combines structural long-term growth and today’s execution, RTX should be on your watch list.” RTX has a three-year dividend-growth rate of 7.3%, Simpson said. The stock has a 1.53% dividend yield and has rallied nearly 55% year to date. (Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here .)
