5 Stocks Growing Their Dividends by 25% Per Year
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 by more than 25% over the past year:
1-Year Dividend Growth Rate
Source: S&P Capital IQ.
Founded in 1869, Goldman Sachs is a leading global investment banking, securities, and investment management firm that provides a wide range of financial services to a diversified client base that includes corporations, financial institutions, governments, and high-net-worth individuals. Goldman Sachs currently has a three-star ranking on CAPS and offers investors a growing 1.2% yield.
Novo Nordisk is a global health-care company with 90 years of innovation and leadership in diabetes care. The company also has leading positions within haemophilia care, growth hormone therapy, and hormone replacement therapy. Novo Nordisk sports a four-star rating in CAPS and is yielding 1.4%.
Seaspan owns and operates a fleet of approximately 70 containerships chartered primarily under long-term fixed-rate time charters to major container liner companies. These long-term contracts produce steady cash flows that Seaspan passes on to investors in the form of a sizable 5.5% yield, helping the company earn a top five-star rating on CAPS.
Williams-Sonoma is a specialty retailer of home furnishings in the U.S. and Canada, with some of the best-known and most respected brands in the industry. The company markets its brands through all three major channels -- retail stores, catalogs, and the Internet -- helping it successfully navigate the global transition toward greater online sales. Fools have given Williams-Sonoma a three-star rating in CAPS and its stock is yielding 2.2%.
Golar LNG is a midstream liquefied natural gas company engaging in the transportation, regasification, liquefaction, and trading of LNG. Golar is also one of the world's largest independent owners and operators of liquefied natural gas carriers. CAPS participants have awarded Golar with a four-star rating, and the company is currently paying a 4.8% dividend.
The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 27% to nearly 30%. That level of growth would provide a substantial boost to just about any investor's dividend income. 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 Stocks Growing Their Dividends by 25% Per Year 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 Goldman Sachs and Williams-Sonoma and owns shares of Seaspan. 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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