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.

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