The Fastest-Growing Dividend Aristocrats

Dividend-paying companies are an oasis in the desert of underperforming stocks. They offer solid payouts today and the promise of capital gains tomorrow. According to a study by Ibbotson, reinvested dividends made up about 40% of total stock returns from 1926 to 2006. In fact, dividend investing is so appealing that superinvestor Warren Buffett has made it a significant component of his portfolio.

When searching for great dividend stocks, it makes a lot of sense to start with companies that have been playing the dividend game the longest. Standard & Poor's has culled the dividend winners from the also-rans in a list it calls the "dividend aristocrats."

Let's examine the top 25 fastest-growing yields among these dividend aristocrats. For context, I've also included their trailing yield.

Company

5-Year Average Annual Dividend Growth Rate

Yield

CenturyLink (NYS: CTL)

63.9%

8.4%

Lowe's (NYS: LOW)

29.7%

2.9%

McDonald's (NYS: MCD)

28.9%

2.8%

Walgreen (NYS: WAG)

21.9%

2.6%

Target (NYS: TGT)

20.1%

2.5%

AFLAC (NYS: AFL)

19.7%

3.2%

W.W. Grainger (NYS: GWW)

17.7%

1.9%

Wal-Mart (NYS: WMT)

15.6%

2.9%

Automatic Data Processing (NAS: ADP)

14.9%

3%

Clorox (NYS: CLX)

14.4%

3.5%

Becton, Dickinson (NYS: BDX)

14.2%

2%

PepsiCo (NYS: PEP)

12.6%

3.3%

VF Corp (NYS: VFC)

12.2%

2.3%

Ecolab (NYS: ECL)

11.9%

1.5%

Hormel Foods (NYS: HRL)

11.5%

1.8%

Procter & Gamble (NYS: PG)

11.4%

3.4%

Sigma-Aldrich (NAS: SIAL)

11.2%

1.1%

Archer-Daniels-Midland (NYS: ADM)

10.9%

2.3%

Family Dollar Stores (NYS: FDO)

10.9%

1.5%

Leggett & Platt (NYS: LEG)

10.7%

5.6%

Chubb (NYS: CB)

10.3%

2.6%

Air Products & Chemicals (NYS: APD)

10.1%

2.8%

Dover (NYS: DOV)

10.1%

2.3%

Abbott Laboratories (NYS: ABT)

10%

3.9%

Johnson & Johnson (NYS: JNJ)

9.9%

3.6%

Source: Capital IQ, a division of Standard & Poor's.

These aren't formal recommendations -- just ideas for your own further research. Still, they could give you a great start toward find companies capable of paying rising dividends for a quarter-century or more. You can find the list of highest yields here.

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At the time thisarticle was published Jim Royal, Ph.D.,owns shares of P&G, J&J, and McDonald's.The Motley Fool owns shares of Clorox, PepsiCo, Abbott, AFLAC, Johnson & Johnson, and Wal-Mart.Motley Fool newsletter serviceshave recommended buying shares of Becton, Clorox, Abbott, Procter & Gamble, McDonald's, ADP, Lowe's, AFLAC, J&J, Wal-Mart, and PepsiCo; creating diagonal call positions in Wal-Mart, J&J, and PepsiCo; and writing covered calls on Lowe's. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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