One of the biggest threats behind income investors who are living off dividends in retirement is inflation. Even a portfolio consisting of the highest yielding stocks today, which maintain their distributions, would produce an income which loses purchasing power over time. As a result investors should focus on companies which can afford to regularly raise distributions every year. A good starting point includes companies which have consistently raised dividends for a long period of time.
I have highlighted several stocks, which not only have raised distributions for over five years in a row, but also announced dividend increases over the past week:
Archer Daniels Midland Company (ADM) procures, transports, stores, processes, and merchandises agricultural commodities and products in the United States and internationally. It operates in three segments: Oilseeds Processing, Corn Processing, and Agricultural Services. The company raised its quarterly dividend by 6.70% to 16 cents/share. This marked the thirty-sixth consecutive annual dividend increase for this dividend aristocrat. This dividend growth stock has managed to increase distributions by 12.60% per year over the past decade. Yield: 1.80% (analysis)
Avon Products Inc. (AVP) manufactures and markets beauty and related products worldwide. The company raised its quarterly dividend by 4.50 % to 23 cents/share. This marked the 22nd consecutive annual dividend increase for this dividend achiever. This dividend growth stock has managed to increase distributions by 9.10% per year over the past decade. Yield: 3.20%
Meredith Corporation (MDP) a media and marketing company, engages in magazine and book publishing, television broadcasting, integrated marketing, and interactive media business in the United States. It operates in two segments, Publishing and Broadcasting. The company raised its quarterly dividend by 10.90% to 25.50 cents/share. This marked the 17th consecutive annual dividend increase for this dividend achiever. This dividend growth stock has managed to increase distributions by 11.10% per year over the past decade. Yield: 3%
Avista Corporation (AVA), an energy company, engages in the generation, transmission, and distribution of energy and energy-related businesses in the United States and Canada. The company operates through two segments, Avista Utilities and Advantage IQ. The company raised its quarterly dividend by 10% to 27.50 cents/share. This marked the ninth consecutive annual dividend increase for this dividend stock. This dividend growth stock has managed to increase distributions by 7.60% per year over the past decade. Yield: 4.80%
DCP Midstream Partners, LP (DPM) engages in gathering, compressing, treating, processing, transporting, and selling natural gas. The company raised its quarterly distribution to 61.75 cents/unit. This marked the sixth consecutive annual distribution increase for this master limited partnership. This dividend growth stock has managed to increase distributions by 7.00% per year over the past three years. Yield: 6.30%
Nu Skin Enterprises, Inc. (NUS) develops and distributes anti-aging personal care products and nutritional supplements worldwide. The company raised its quarterly dividend by 8% to 13.50 cents/share. This marked the eleventh consecutive annual dividend increase for this dividend achiever. This dividend growth stock has managed to increase distributions by 6.80% per year over the past five years. Yield: 1.80%
Jack Henry & Associates, Inc. (JKHY) provides integrated computer systems and services for in-house and outsourced data processing to commercial banks, credit unions, and other financial institutions primarily in the United States. The company raised its quarterly dividend by 10.50% to 10.50 cents/share. This marked the 19th consecutive annual dividend increase for this dividend achiever. This dividend growth stock has managed to increase distributions by 14.30% per year over the past decade. Yield: 1.40%
Ross Stores, Inc. (ROST), together with its subsidiaries, operates two chains of off-price retail apparel and home accessories stores in the United States. The company raised its quarterly dividend by 37.50% to 22 cents/share. This marked the sixteenth consecutive annual dividend increase for this dividend achiever. This dividend growth stock has managed to increase distributions by 23.70% per year over the past decade. Yield: 1.30%
Hasbro, Inc. (HAS) engages in the design, manufacture, and marketing of games and toys. The company raised its quarterly distributions by 20% to 30 cents/share. This marked the eight consecutive annual dividend increase for Hasbro. This dividend growth stock has managed to increase distributions by 14.70% per year over the past decade. Yield: 2.70%
J.B. Hunt Transport Services, Inc. (JBHT), together with its subsidiaries, operates as a surface transportation and delivery services company in North America. The company raised its quarterly dividend by 8.33 % to 13 cents/share. This marked the eight consecutive annual dividend increase for this dividend achiever. This dividend growth stock has managed to increase distributions by 14.90% per year over the past five years. Yield: 1.30%
All of the stocks mentioned above have managed to increase distributions at a rate that is higher than the rate of inflation. Before initiating a position in a prospective dividend stock however, investors should evaluate the business, try to avoid paying top dollar for it and ensure that distributions are sustainable.
Full Disclosure: Long ADM
Relevant Articles:
- Dividend Achievers Offer Income Growth and Capital Appreciation
- The Future for Dividend Investors
- How to select dividend stocks?
- Inflation Proof your income in retirement with Dividends Stocks