19 Dividend Growth Stocks Raising Dividends for Shareholders

As a shareholder, there are two ways to make profits from a stock. 

The first way is when you sell your stock for a gain, after it has increased above your purchase price. The downside is that once you sell your stock, you will not be able to participate in any further upside. If you hold patiently however, you will experience a surge in net worth if the business succeeds. 

The second way is when a stock you own distributes a dividend. A company typically distributes a dividend after carefully evaluating its business needs. If a business does not find enough good opportunities to deploy profits at high rates of return, then the rational thing to do is to distribute it to shareholders. Some businesses are able to both grow earnings and dividends. 

There are over 520 businesses in the US, which have managed to increase dividends to shareholders for at least a decade. I try to monitor most of them, in an effort to review existing holdings, and uncover companies for further research. 

My monitoring process involves different steps. I regularly screen the investable universe, using my criteria, before reviewing promising candidates. I also review some major news like filings and dividend increases as well for a narrower view of the universe.

For example, last week, there were 63 US companies that raised dividends. Of those companies, only 19 had managed to grow dividends for at least 10 years in a row. You can view this list below:

As part of my review, I look at the size of the increase and compare it to the five and ten year average. I also review the trends in earnings per share, in order to determine if the track record of dividend growth was from a solid base.

I like reviewing trends in payout ratios, in order to determine dividend safety. This of course is best done in conjunction with reviewing of earnings per share.

Last but not least, I also review valuation, in order to determine if a company is worth reviewing today for a potential acquisition.

When I review companies, I look at ten year trends in:

1) Earnings per share

2) Dividend payout ratio

3) Dividends per share

4) Valuation

Since I have some experience evaluating dividend companies, I also modify my criteria based on the environment we are in and the availability of quality companies. If I see a company with a strong business model and certain characteristics that I like, I may require a dividend streak that is lower than a decade. I have also found success in looking beyond screening criteria by purchasing stocks a little above the borders contained in a screen.

It is important to be flexible, without being too lenient.

How to think about the sources of investment returns

In terms of a somewhat succint summary, it is good to think in terms of trade-offs in the full picture. The expected returns formula I use really summarizes things neatly, and makes you think about how changes in the different variables impact overall results over a given time period.

The expected returns formula is a function of:

1. Dividends

2. Earnings Per Share Growth

3. Changes in valuation

I am using this additional step in the exercise, because quite often I see folks whose whole analysis stems from looking at a price chart and making up their mind from it. This is dangerous in my opinion, because you need to understand the context and reasons of why what happened happened. And from them to determine if it can happen further in the future, or not. All probabilistically speaking of course.

One needs to look at these three items together, rather than in isolation, when it comes to understanding where returns come from.

But in general, the first two items, dividends and earnings per share growth are the fundamental sources of returns. Over long periods of time, of at least 10 - 20 years, these items generate the lions portion of returns. The percentage increases the further out in time you go.

The last time, change in valuation, is part of the speculative returns. This can ebb and flow wildly in the short run, from month to month, year to year and even 5 - 10 years. Changes in valuation can push down returns or really accelerate returns in the short-run, but those are very hard to predict. The longer your timeframe however, the lower the importance of the changes in valuation on returns. Unless of course you really really overpaid at the start - think investing at 100 times earnings in Nikkei in 1989 or buying tech stocks at 100 times earnings in 1999. 

As a long-term investor, I focus on fundamental returns (dividends and earnings). I do try to ensure I am not overpaying for a security. Other than that, valuation is a range that is accepted or not. My goal is to find a good company I can hold for decades first. Valuation is important, but in reality it only affects a portion of my returns.

For example, if I invest in a stock it does matter if I pay 15 or 25 times earnings for it in the first decade of ownership. After all, if growth in earnings per share is the same under each scenario, you are better off buying at 15 times earnings. Buying low also means obtaining a higher starting yield today. In an ideal world, you would buy low, then be able to reinvest dividends at a higher yield, and then ultimately the stock price would be revalued higher. This is how many of the greatest investors have done it.

However, you do not always have the option of either buying low or buying high. In many cases, you may have to "buy high" because you may also miss out on buying at all. There is an opportunity cost associated with waiting for too long for the perfect set-up that never comes.

After all, the real wealth for a long-term investor is not if you bought at 15 or 25 times earnings, but identifying a company that can grow those earnings at a steady clip over time, and pay a growing dividends along the way. It took me a long while to realize this lesson.

I really love this chart from the late Jack Bogle, which illustrated the interplay between the sources of return on S&P 500 between 1946 and 2015. It really puts things in perspective. 

This type of thought process works on individual companies, indices and other assets such as bonds for example.

I have posted several articles in the past, discussing the sources of investment returns, and applying the concepts to real-world situations. You can read and enjoy below:

Altria, Dividends and Total Returns

Sources of Investor Returns: Visa Edition

A Simple Model For Estimating Future Returns

Price, Value and Sources of Returns

Realty Income Over The Past Five Years

Microsoft During the lost decade

The one lesson from the first "Lost Decade" of the 21st Century..

Value in Growth Clothes: Growth in Value Clothes

The Best Performing Dividend Aristocrat Over The Past Decade

Microsoft and Altria: A Look at the past decade

Altria and Microsoft - returns over the past decade

Twenty Dividend Growth Stocks Raising Dividends Last Week

 I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me monitor existing holdings, but also potentially identify companies for further research. Plus, it helps me get the pulse of corporate boards. One of my favorite exercises in compiling this report is to look at the press releases, and noting down management verbiage related to the dividend increases. That pulse check is a good sentiment check. After all, dividends have a great deal of signaling power, which neatly summarizes corporate board expectations about near term business conditions. The output of that being the dividend increase amounts. 

TL;DR - dividend increase announcements include a lot of information that could be helpful to me as an investor.

Over the past week, there were 60 dividend increases in the US. I went ahead and isolated the 20 companies that increased dividends last week AND have a ten year track record of annual dividend increases. The list can be observed below:

Reviewing the dividend growth universe for dividend increases is part of my monitoring process. For my review, I narrow my focus to the companies with a ten year streak of annual dividend increases. I do this in order to look at companies with a sufficiently long streak of dividend growth.

The next step involves reviewing trends in earnings and dividends. I want to see earnings per share which are growing. Rising EPS can fuel future dividend growth. I also want to see dividend increases which are of decent size, and not done merely to maintain the streak of annual dividend increases.

A steep deceleration in the dividend growth rate relative to the ten year average tells me that management is not very optimistic on their business. If this is coupled with a high payout ratio and stagnant earnings per share, I can tell that the dividend streak is nearing its end.

Last but not least, I also want a decent valuation behind an investment. If I overpay dearly for an investment today, this means that the expectations for the first few years after I make the investment are already baked in the price. As a result, I want to void overpaying for an investment. Unfortunately, this is easier said than done.

The Trade-Off Between Dividend Yield and Dividend Growth

Life is full of choices. 

A few examples include:

Should I spend money on things today, or save money for the future?

Ultimately, you need to strike the right balance between those two seemingly opposite ends of the spectrum.

This is where trade-offs come handy, because they force a balance, a compromise between these two ends of the spectrum.

In the world of Dividend Growth Investing, the ultimate trade-off is the Dividend Yield versus Dividend Growth Connundrum.

On one hand, buying a company with a high dividend yield today would provide high income today. However, this investment may not grow the dividend to maintain the purchasing power of that income. In addition, that high yielding investment may have a high payout ratio. A higher payout ratio may be a problem in a recession, when earnings decline, thus increasing the risk of a dividend cut. 

On the other hand, buying a company with a high dividend growth today, could provide high income in the future.

This investment would not provide high income today however. Even though the dividend is expected to grow at a high rate of return over time, this does require patience. In addition, there is a possibility that this growth expectation does not materialize, as growth slows down. 

All of this is a gross simplification. There are a lot of data points to consider, and possible exceptions, but I've tried to summarize it to the best way possible. That being said, I view three different types of dividend growth companies, based entirely on this yield/growth trade-off.

I personally try to think through those trade-offs when I review a company. In general, expected returns are a function of:

1. Dividend Yield

2. Growth (EPS or Dividend Growth as they are roughly equal over time)

3. Change in valuation multiples

For example, for a company like Verizon (VZ) today, you get a dividend yield of 6.75%. You have an expected dividend growth rate of about 2%. This nets to an expected return of 8.75%. Let's call it 9% for simplicity.

On the other hand of the spectrum is a company like Visa (V). You get a dividend yield of 0.70%. However, dividends have a high expected rate of growth. If Visa manages to grow dividends by 12%/year, it can generate high yields on cost for patient long-term investors. Along with high expected returns of roughly 12.70%. Let's call it 13% for simplicity.

We can go back 10 or 15 years, and see that an investment in Visa would have been a smarter choice than an investment in Verizon. This of course is used merely to illustrate a point.

At the very end of 2009, Verizon sold at $27.59/share. The company paid an annual dividend of $1.90/share. The starting yield was high at 6.88%. Fast forward to the end of 2024, and the stock sold at $39.99/share and paid an annual dividend of $2.72/share. Therefore, the investor from 2009 would be generating an yield on cost of 9.85%, on top of the modest capital gains they generated.

At the end of 2014, Verizon sold at $46.78/share and had an annual dividend of $2.20/share. The starting yield was 4.70%. Investors who bought it back then would be sitting on a small unrealized capital loss, but generating an yield on cost of 5.81%.

Let's look at Visa.

At the very end of 2009, Visa sold at $21.86/share. This was adjusted for stock splits. The company paid an annual dividend of $0.12/share. The yield was low in 2009 at 0.55%. Fast forward to the end of 2024, and the stock sold at $316.04/share and paid an annual dividend of $2.36/share. The current yield is still low at 0.75%. However, the investor from 2009 would be generating an yield on cost of 10.80%, on top of the exceptional capital gains they generated.

At the end of 2014, Visa sold at $65.55/share and had an annual dividend of $0.48/share. The yield was low at 0.73%. However, investors who bought it back then would be sitting on a high unrealized capital gain, but generating an yield on cost of 3.60%.

The yield on cost for Visa is higher than Verizon over the past 15 years, and the same is true for the unrealized capital gains.

Over the past ten years however, Verizon still has a higher yield on cost than Visa, notably due to the higher starting yield. However, Visa still delivered higher unrealized capital gain.

I would argue that Visa's dividend is better covered than Verizon, due to it's lower payout ratio and higher expected growth in earnings. However, Visa's stock is not cheap today, as it discounts expectations for growth to continue. Visa sells for 30.85 times forward earnings and yields 0.68%. It has a forward payout ratio of 21%.

Verizon's stock is cheaper today, selling at 8.50 times forward earnings and yields 6.80% today. The forward payout ratio is 58%. However that's because the market expects small growth, if any. The high payout ratio also makes this dividend riskier.

Ultimately, life is full of trade-offs. The decision of whether to focus more on dividend yield versus dividend growth, or vice versa, is one such trade-off. 

Where you lean on the spectrum of this trade-off would depend on various factors, such as your expectations, risk profile, timeframe, experience, goals and objectives etc.

Hope you enjoyed today's article, and you get to thinking about those trade-offs you are making, when making your next investment. I know I do think about the trade-offs involved, whenever I try to build out my portfolio, brick by brick, to reach out my own goals and objectives.

23 Dividend Growth Companies Raising Dividends Last Week

I review the list of dividend increases every week, as part of my monitoring process. Dividends have signaling power about management's outlook for the business. As such dividend increase announcements could provide useful insights, if you know how to read them. Which goes hand in hand with monitoring.

This exericise helps me review existing holdings and also potentially identify companies for further research.

This exercise also shows how I can quickly evaluate a population of dividend growth stocks, and narrow it down to a more manageable list for further research.

Over the past week, there were 62 companies that raised dividends in the US. Twenty three of these companies that raised dividends also have a 10 year track record of annual dividend increases under their belt. The companies include:

As I mentioned above, this list is just a starting list for research and monitoring. It's not a recommendation. In order to narrow down the list, I would look at each company fundamentally, and then do a review of its valuation before deciding where to go next. I also do try to invest in companies I understand, which also prevents me from investing in companies I do not understand. You may like this old post about my entry criteria.  You may also like my post about valuation here. 

Note that I didn't include Meta's (META) first dividend increase in this review. Note that I did find it a little low - a measly 5% to 52.50 cents/share on the quarterly dividend. I would have expected that a large company in the initial phase would have stronger dividend growth. Or perhaps Meta is stating that whatever it is they are building today may need a ton of cash. Hopefully, those large CAPEX investments are allocated at a high ROI to generate further FCF/share growth. 

I also wanted to note that there were a few non-US companies that raised dividends last week as well. These are well-known and perhaps widely held as well.

Those include:

British American Tobacco (BTI), which announced a 2% hike in the annual dividend to GBP 2.4024/share. This is the 28th consecutive annual dividend increase for this international dividend aristocrat.

Nestle (NSRGY), which announced a 1.67% raise in the annual dividend to 3.05 CHF/share. This is the 29th consecutive annual dividend increase for this international dividend aristocrat. 

I was unsure whether to note it or not, but it seems like Unilever (UL) is starting to increase dividends again. The company just raised quarterly dividends to €0.4528/share, which is 6.09% raise over the dividend paid during the same time last year. It's also a 3% increase over the prior dividend. That's after keeping it unchanged for three and a half years, and losing its dividend aristocrat status in 2022.