3 ‘no-brainer’ dividend growth stocks to buy with £3,000?

The great thing about being a UK-based income investor is that there’s no shortage of dividend stocks in our home market to choose from. Even so, it’s a good idea to have a few methods for sorting the wheat from the chaff.

One thing I always look for is evidence that a company has been returning more cash to holders every (or nearly every) year.

Among those that spring to mind from the FTSE 100 are:

• Halma
• Diploma
• British American Tobacco (LSE: BATS)

All three have decades of consecutive annual dividend raises behind them. So, surely they are ‘no-brainer’ buys for someone with a juicy £3,000 to invest, right?

Well, let’s look at one of these in more detail.

Smoking hot!

Thanks to better-than-expected trading and an undemanding valuation, British American Tobacco shares have been performing brilliantly in 2025. A gain of 30% at the time of writing is pretty much double that achieved by the index as a whole. And it’s worth pointing out that this has already been an exceptionally good year for the usually-pedestrian FTSE 100.

But, of course, we’re here to look at dividends.

Despite a galloping share price, the income stream from the £83bn cap beast remains compelling.

At 6.4% for FY25, the yield is double that of the average among the UK’s biggest companies. And analysts already have forecasted another 2% rise to the total dividend in 2026.

Tougher times ahead?

As always, it’s important to think about what may go wrong. No investment is free from risk and all three of those identified above have their fair share of vulnerabilities.

Ultra-reliable dividend hikers like health and safety tech firm Halma and value-add distribution company Diploma have both been super-successful at growing by acquisition. But both stocks trade at high valuations as a result. This arguably makes them vulnerable to big falls if that growth slows, they overpay for smaller companies, and/or when investors get scared about the wider economic climate.

But British American Tobacco is arguably the most risky of the bunch.

Regulation incoming

As traditional cigarette sales continue to slowly decline, the company is becoming increasingly dependent on next generation products like vapes, nicotine pouches, and heated tobacco to compensate. As things stand, this transition is going well. This range now accounts for almost 20% of group revenue.

But there’s no guarantee that this percentage will continue rising. And one potentially huge catalyst for this not happening will be the gradual involvement of regulators. The passing of the Tobacco and Vapes Bill in the UK could be just the start.

Bottom line

Taking all this into account, I don’t think any stock — including British American Tobacco — can be described as a ‘no-brainer’ buy. After all, dividends can never be guaranteed.

And I certainly don’t think investors should consider throwing their money at any company without doing the proper due diligence first. The extent to which cash distributions have grown over time is just one way of judging a firm’s quality among many. Call me picky but I need a few more reasons.

Even so, I’d rather a business boasted a brilliant record of raising dividends than not. And that’s why these three might stand a good chance of making my own shortlist of income-bearing stocks to consider buying.