Dividend growth stocks are one of the best-kept secrets in the investing world. After all, these are high-quality companies with strong competitive advantages that allow them to generate rising earnings over time. As a result, most of these companies generate so much in excess cash flow that they are able to pay a higher dividend over time without sacrificing long-term growth.
Companies that raise dividends at a high rate could easily generate double-digit yields on cost for investors who bought early and at the right time.
The following dividend champions have the highest consistent dividend growth rates:
Lowe’s (NYSE:LOW), together with its subsidiaries, operates as a home improvement retailer in the United States and Canada. The company has boosted distributions for 49 years in a row. Ten-year annual dividend growth rate: 27.6%. Yield: 2.8%. (analysis)
McDonald’s (NYSE:MCD), together with its subsidiaries, operates as a worldwide foodservice retailer. The company has increased distributions for 35 consecutive years. Ten-year annual dividend growth rate: 26.5% Yield: 2.8%. (analysis)
Raven Industries (NASDAQ:RAVN) manufactures various products for industrial, agricultural, construction and military/aerospace markets in the United States and internationally. The company has boosted distributions for 25 years in a row. Ten-year annual dividend growth rate: 18.2%. Yield: 1.5%.
Wal-Mart (NYSE:WMT) operates retail stores in various formats worldwide. The company has increased distributions for 37 consecutive years. Ten-year annual dividend growth rate: 17.8% Yield: 2.8%. (analysis)
Medtronic (NYSE:MDT) manufactures and sells device-based medical therapies worldwide. The company has increased distributions for 34 consecutive years. Ten-year annual dividend growth rate: 16.9%. Yield: 3%. (analysis)
Walgreen (NYSE:WAG), together with its subsidiaries, engages in the operation of a chain of drugstores in the United States. The company has increased distributions for 36 consecutive years. Ten-year annual dividend growth rate: 16.5%. Yield: 2.5%. (analysis)
Sigma-Aldrich Corp. (NASDAQ:SIAL), together with its subsidiaries, develops, manufactures, purchases and distributes a range of chemicals, biochemicals and equipment worldwide. The company has boosted distributions for 35 years in a row. Ten-year annual dividend growth rate: 15.2%. Yield: 1.1%.
Becton, Dickinson & Co. (NYSE:BDX) is a medical technology company which develops, manufactures and sells medical devices, instrument systems and reagents worldwide. The company has increased distributions for 38 consecutive years. Ten-year annual dividend growth rate: 14.9%. Yield: 2.1%. (analysis)
Target (NYSE:TGT) operates general merchandise and food discount stores in the United States. The company has boosted distributions for 44 years in a row. Ten-year annual dividend growth rate: 14.9%. Yield: 2.4%. (analysis)
Colgate-Palmolive (NYSE:CL), together with its subsidiaries, manufactures and markets consumer products worldwide. The company has increased distributions for 48 consecutive years. Ten-year annual dividend growth rate: 12.4%. Yield: 2.7%. (analysis)
Dividend investing is not an automatic process. Investors should analyze the stocks in detail to decide whether they stand a chance of increasing distributions in the double digits over the next decade. Investors should analyze not only quantitative factors such as earnings, dividend sustainability and ROE, but also qualitative factors such as business model, competitive advantages, etc.
Full Disclosure: Long MCD, WMT, MDT, WAG, CL
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