Ten Dividend Growth Stocks That Keep Delivering For Their Shareholders

Dividend growth stocks are the gift that keeps on giving. I like the fact that most of the work in selecting good dividend growth stocks is upfront in analyzing those investments. What follows next is a lifetime of dividend payments, distributed every quarter, which grow over time. My goal is to assemble enough dividend growth stocks in my portfolio, in order to start generating income to pay for my retirement. My dividend portfolio is a silent worker in my household, who works 24/7 for me, and who dutifully shares all of their income with me. This income is completely passive in nature, and it does not require me to wake up at 6 am every day, shuffle TPS reports all day long, and make sure I do not forget to put a coversheet on those same reports.

I like watching dividend growth investing at work – this is when the companies I own keep rewarding me with a higher dividend check for a decision I made years ago. There were several notable companies which raised their dividends to shareholders. The list includes:


Johnson & Johnson (JNJ), together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. It operates through three segments: Consumer, Pharmaceutical, and Medical Devices. The company raised its quarterly dividend by 6.70% to 80 cents/share. This marked the 54th consecutive annual dividend increase for this dividend king. In the past decade, Johnson & Johnson has managed to increase dividends at an average rate of 8.70%/year. The stock is attractively valued at time forward earnings and yields 2.80%. If I were starting out today, this is one of the first companies I would be buying for my dividend portfolio.

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. The company raised its quarterly dividend by 7.70% to $1.40/share. This marked the 21st consecutive annual dividend increase for this dividend achiever. In the past decade, IBM has managed to increase dividends at an average rate of 20.40%/year. The stock is attractively valued at 10.80 times forward earnings and yields 3.70%. It seems like everyone is expecting the end of IBM. Based on my interpretation of Buffett’s body language during the 2016 Berkshire Hathaway meeting, even the mighty Oracle of Omaha may have second doubts about Big Blue. I believe that as long as the company can maintain a stable net income, it could generate dividend growth and good returns to shareholders with its buybacks at low valuations. In my case, the opportunity cost of investing in IBM in 2013 was not buying up enough Accenture (ACN).

Exxon Mobil Corporation (XOM) explores for and produces crude oil and natural. It also manufactures and markets commodity petrochemicals, and specialty products; and transports and sells crude oil, natural gas, and petroleum products. The company raised its quarterly dividend by 2.70% to 75 cents/share. XOM This marked the 34th consecutive annual dividend increase for this dividend champion. In the past decade, Exxon Mobil has managed to increase dividends at an average rate of 9.70%/year. I do not see the stock as attractively valued today. I do like that fact that I am paid a dividend yield of 3.40% to wait until oil prices rebound.

United Technologies Corporation (UTX) provides technology products and services to building systems and aerospace industries worldwide. The company raised its quarterly dividend by 3.10% to 66 cents/share. This marked the 23rd consecutive annual dividend increase for this dividend achiever. In the past decade, United Technologies has managed to increase dividends at an average rate of 11.30%/year. The stock is attractively valued at 15.90 times forward earnings and yields 2.50%. However, as a rule I am hesitant to buy shares in a company right after it slows down dividend growth significantly. I am also unsure how smart selling off a division for cash to Lockheed Martin was, since it would result in a hefty tax bite that would . I prefer to take a wait and see approach – however I would happily hold on to my existing United Technologies stock.

Wells Fargo & Company (WFC) provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. The company raised its quarterly dividend by 1.30% to 38 cents/share. This marked the 6th consecutive annual dividend increase for this dividend stock. In the past decade, Wells Fargo has managed to increase dividends at an average rate of 4%/year. This is pretty impressive, since in 2009 the company cut dividends to the bone during the global financial crisis. The stock seems attractively valued at 12.10 times earnings and a dividend yield 3%. I have a small position in Wells Fargo that I initiated a few years ago. However, I have not been happy with their inability to grow revenues over the past 7 – 8 years. As a result, I do not plan on adding further to my Wells Fargo holdings.

W.W. Grainger, Inc. (GWW) distributes maintenance, repair, and operating (MRO) supplies; and other related products and services that are used by businesses and institutions. The company raised its quarterly dividend by 4.30% to $1.22 /share. This marked the 45th consecutive annual dividend increase for this dividend champion. In the past decade, W.W. Grainger has managed to increase dividends at an average rate of 17.40%/year. The stock is close to being fully valued at 19.50 times forward earnings and a current yield of 2.10%. I would be more interested in W.W. Grainger if it can yield 2.50% or more.

Ameriprise Financial, Inc. (AMP), through its subsidiaries, provides various financial products and services to individual and institutional clients in the United States and internationally. The company raised its quarterly dividend by 11.90% to 75 cents/share. This marked the 12th consecutive annual dividend increase for this dividend achiever. In the past decade, Ameriprise Financial has managed to increase dividends at an average rate of 37.10%/year. I find the stock to be attractive at 10.10 times forward earnings and a current yield of 3.10%. I have a soft spot for Ameriprise, and believe the company will do well over the coming decades, despite fears that everyone will be an index investor.

American Water Works Company, Inc. (AWK), through its subsidiaries, provides water and wastewater services in the United States and Canada. The company offers water and wastewater services to approximately 1,600 communities in 16 states. The company raised its quarterly dividend by 10.30% to 37.50 cents/share. This marked the 9th consecutive annual dividend increase for this dividend stock. In the past five years, American Water Works has managed to increase dividends at an average rate of 9.10%/year. The stock is overvalued at 25.80 times forward earnings and yields 2.10%. I would be potentially interested in researching more about the stock on dips below 20 times earnings.

Sonoco Products Company (SON) manufactures and sells industrial and consumer packaging products in North and South America, Europe, Australia, and Asia. The company operates through four segments: Consumer Packaging, Paper and Industrial Converted Products, Display and Packaging, and Protective Solutions. The company raised its quarterly dividend by 5.70% to 37 cents/share. This marked the 34th consecutive annual dividend increase for this dividend king. In the past decade, Sonoco has managed to increase dividends at an average rate of 4.10%/year. The stock seems attractively valued at 17.30 times forward earnings and a dividend yield of 3.10%. One reason why I haven’t analyzed the company is due to its inability to grow earnings per share by much over the past decade. Between 2006 and 2015, earnings per share went from $1.96 to $2.44 or a cool 27%. Without much future growth in earnings per share, it would be very difficult to grow dividends per share.

Public Storage (PSA) is an equity real estate investment trust. It engages in the acquisition, development, ownership, and operation of self-storage facilities in the United States and Europe. The company raised its quarterly dividend by 5.90% to $1.80/share. This marked the 7th consecutive annual dividend increase for this dividend stock. In the past decade, Public Storage has managed to increase dividends at an average rate of 13.10%/year. This REIT sells for 27.50 times Funds from Operations (FFO) and yields 2.90%. The FFO payout ratio is at 81%. I have not researched this REIT before, so I should probably put in on the list for further research. After disposing of most of my pass-through entities however, I do my REIT investing through a fund within my Roth IRA.

Full Disclosure: Long JNJ, XOM, IBM, GWW, AMP. WFC, UTX, ACN, BRK.B

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