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.
5-Year Average Annual Dividend Growth Rate
|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 this article 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.