5 Rock-Solid Stocks Growing Their Dividends Well Above Inflation

5 Rock-Solid Stocks Growing Their Dividends Well Above Inflation

Dividend investors would be wise to focus not just on a stock's current yield, but also on the long-term growth potential of its dividends. That's because strong businesses that consistently raise their dividend payouts reward shareholders with a steadily rising income stream that essentially equates to a raise every year. And, well, who doesn't like a raise?

But there are other reasons to value dividend growth so highly, and they're well supported by research. For instance, a study by C. Thomas Howard published in Advisor Perspectives found that for every percentage point a stock's yield rises, its annual return increases by 0.22 percentage points if it's a large cap, 0.25 if it's a mid cap, and 0.46 if it's a small cap. Even better, Howard found that dividend-growing stocks outperformed dividend cutters by 10 percentage points per year from 1973 to 2010 and beat both flat- and no-dividend stocks. And the icing on the cake is that Howard showed that this outperformance came with a third less volatility. Higher returns, less volatility-induced stress, and a steadily growing income stream -- what's not to love?

With that in mind, here are five stocks that have grown their dividends significantly above the rate of inflation in the last year:


1-Year Dividend Growth Rate

General Mills




Enterprise Products Partners


Flowers Foods


Activision Blizzard


Source: S&P Capital IQ.

General Mills' valuable collection of brands includes popular breakfast cereals (Cheerios, Chex, and Wheaties), Betty Crocker desert mixes, Green Giant vegetables, and Yoplait yogurt, along with a host of other valuable properties. This consumer-goods titan currently sports a four-star rating in CAPS and is yielding 3.1%.

Intel designs, manufactures, and sells integrated digital technology platforms worldwide. Its microprocessors and chipsets power millions of PCs and servers around the world. Intel is also attempting to establish a beachhead in the massive smartphone and tablet markets, which could drive revenue growth for the chip giant in the years ahead. Fools have given Intel a four-star rating in CAPS, and its stock is yielding a sizable 4%.

Enterprise Products Partners is a midstream energy company providing a range of services to producers and consumers of natural gas, natural gas liquids, crude oil, and certain petrochemicals. Its pipelines help to provide the needed infrastructure to support growing energy production in the U.S., and its stock offers investors a hefty 4.6% dividend. CAPS participants no doubt appreciate all of this and have awarded Enterprise Products Partners with the highest five-star rating.

Flowers Foods produces and markets bakery products in the United States. The company also excels at creating value for shareholders by acquiring smaller bakeries and quickly boosting their revenue and profits by integrating them into its sizable distribution network. All of this, along with a growing 2% dividend, probably has helped Flowers Foods earn a top five-star rating on CAPS.

Activision Blizzard is a leading publisher of video games, including valuable franchises such as World of Warcraft, Call of Duty, StarCraft, and Diablo. This Fool favorite has a four-star ranking on CAPS, and its strong free cash flow generation has allowed Activision Blizzard to return cash to shareholders in the form of share buybacks and rising dividend payouts, with shares currently yielding 1.1%.

The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 5% to 8%. And, importantly, all of these companies grew their payout much faster than the rate of U.S. inflation during that time, thereby protecting (and growing) your purchasing power. But more important to investors today is to identify the companies that will grow their dividends substantially in the years ahead. If you're interested in hearing about some excellent companies that are likely to boost their dividends from this point forward, I'd like to offer you a brand-new free report from The Motley Fool's expert analysts called "Secure Your Future With 9 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. To discover the identities of these companies before the rest of the market catches on, you can access this valuable free report by simply clicking here now.

The article 5 Rock-Solid Stocks Growing Their Dividends Well Above Inflation originally appeared on Fool.com.

Joe Tenebrusomanages a Real-Money Portfoliofor The Motley Fool and is an analyst on the Fool's Stock AdvisorandSupernovapremium service teams. You can connect with him on Twitter: @Tier1Investor. Joe has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard, Enterprise Products Partners, Flowers Foods, and Intel and owns shares of Activision Blizzard and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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