This year has been characterized as a record year[1] for dividend distributions paid to shareholders by cash rich companies. The sentiment is even more bullish amongst the elite dividend aristocrats list[2], which includes large-cap corporations each of which have managed to boost distributions for at least 25 consecutive years in a row.

Out of 51 members of the index at 12/31/2011, 35 have increased distributions in 2012, while the remaining companies[3] have not had the chance to announce changes in dividends so far this year. I went through the list of dividend increases, and decided to focus on the companies with the fastest dividend growth rates.

In general, companies that raise distributions at a fast rate will be able to generate a high yield on cost[4] for their investors. This of course will happen only if the high dividend growth rates can be sustained out of rapid growth in earnings or if the companies start out with a low dividend payout ratio. I analyzed each of the high dividend growth aristocrats for 2012 below, in order to determine whether the high dividend growth is a one-time deal or not.

If companies have the characteristic to boost distributions rapidly for a sustained period of time, and if investors are able to get on board at attractive valuations[5], high yields on cost could be achieved in a relatively short periods of time. The companies on the list include:

**Walgreen** (NYSE:WAG[6]), together with its subsidiaries, operates a chain of drugstores in the United States. In June, the company raised annual distributions by 22.20% to $1.10 per share. The ten year dividend growth rate has been 18.90% per year. This dividend aristocrat has raised distributions for 37 years in a row. The stock is attractively valued at 12 times earnings, yields 3.10% and has an adequately covered distribution. I like the high dividend growth rate at the firm and the attractive valuation and as a result I recently added to my position in the stock. (analysis[7])

**Exxon Mobil** (NYSE:XOM[8]) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. In April, the company raised annual distributions by 21.30% to $2.28 per share. The ten year dividend growth rate has been 7.40% per year. This dividend aristocrat has raised distributions for 30 years in a row. The stock is attractively valued at 9.50 times earnings, yields 2.60% and has an adequately covered distribution. While I like the recent strong increase in distributions, I think the yield is lower in comparison to **Chevron** (NYSE:CVX[9]). (analysis[10])

**W.W. Grainger** (NYSE:GWW[11]) engages in the distribution of maintenance, repair, and operating supplies, as well as other related products and services for businesses and institutions primarily in the United States and Canada. In April, the company raised annual distributions by 21.20% to $3.20 per share. The ten year dividend growth rate has been 13.70% per year. This dividend aristocrat has raised distributions for 41 years in a row. The stock is slightly overvalued at 20.90 times earnings, yields 1.60% and has an adequately covered distribution. While I own the stock, I consider it a hold at current valuations, which means I would not add money to this position and would reinvest dividends elsewhere.

**Target** (NYSE:TGT[12]) operates general merchandise stores in the United States. In June, the company raised annual distributions by 20% to $1.44 per share. The ten year dividend growth rate has been 17.50% per year. This dividend aristocrat has raised distributions for 45 years in a row. The stock is attractively valued at 14.70 times earnings and has an adequately covered distribution but yields only 2.30%. In my analysis[13] of the stock, I outlined that I would much rather play retail sector by owning **Wal-Mart** (NYSE:WMT[14]), which is the heavyweight champion in the sector.

**Stanley Black & Decker** (NYSE:SWK[15]) provides power and hand tools, mechanical access solutions, and electronic security and monitoring systems primarily in the United States, Europe, Latin America, and Canada. In July, the company raised annual distributions by 19.50% to $1.96 per share. The ten year dividend growth rate has been 5.70% per year. This dividend aristocrat has raised distributions for 45 years in a row. The stock is slightly overvalued at 20.40 times earnings, although it yields 2.70% and has an adequately covered distribution. I would consider analyzing the stock further in order to determine if it has what it takes to sustain future dividend increases.

**Family Dollar Stores** (NYSE:FDO[16]) operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. In January, the company raised annual distributions by 16.70% to 84 cents per share. The ten year dividend growth rate has been 11.80% per year. This dividend aristocrat has raised distributions for 36 years in a row. The stock is valued at 17.80 times earnings, yields 1.30% and has an adequately covered distribution. Because of the low current yield, it is outside of my buy range. As a result I do not plan on adding to my position in the stock, and I would consider re-investing dividends received in other attractively priced dividend paying companies. (analysis[17])

**Lowe’s** (NYSE:LOW[18]), together with its subsidiaries, operates as a home improvement retailer. In June, the company raised annual distributions by 14.30% to 64 cents per share. The ten year dividend growth rate has been 29.60% per year. This dividend aristocrat has raised distributions for 50 years in a row. The stock is valued at 19 times earnings, yields 2.30% and has an adequately covered distribution. I would consider addin to my position in the stock on dips below $25.60. (analysis[19])

**Sigma-Aldrich** (NASDAQ:SIAL[20]), a life science and high technology company, develops, manufactures, purchases, and distributes various chemicals, biochemicals, and equipment worldwide. In February, the company raised annual distributions by 11.10% to 80 cents per share. The ten year dividend growth rate has been 15.90% per year. This dividend aristocrat has raised distributions for 36 years in a row. The stock is valued at 19.60 times earnings, yields 1.10% and has an adequately covered distribution. While the company has maintained a double digit dividend growth rate, I find the current yield to be low. As a result I would pass on the stock for now, but would continue monitoring if stock trades at lower valuations.

**Dover Corporation** (NYSE:DOV[21]) manufactures and sells a range of specialized products and components, and provides related services and consumables. In August, the company raised annual distributions by 11.10% to $1.40 per share. The ten year dividend growth rate has been 8.50% per year. This dividend aristocrat has raised distributions for 57 years in a row. The stock is attractively valued at 12.80 times earnings, yields 2.40% and has an adequately covered distribution. I would add the company to my list for further analysis.

**Air Products and Chemicals** (NYSE:APD[22]) provides atmospheric gases, process and specialty gases, performance materials, equipment, and services worldwide. In March, the company raised annual distributions by 10.30% to $2.56 per share. The ten year dividend growth rate has been 11.10% per year. This dividend aristocrat has raised distributions for 30 years in a row. The stock is attractively valued at 13.30 times earnings, yields 3.10% and has an adequately covered distribution. I like the fact that APD had managed to consistently boost dividends at a double-digit rate, and I also find the stock to be a bargain at this time. I recently added to my position in the stock. (analysis[23])

**Genuine Parts** (NYSE:GPC[24]) distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, Canada, and Mexico. In February, the company raised annual distributions by 10% to $1.98 per share. The ten year dividend growth rate has been 4.80% per year. This dividend aristocrat has raised distributions for 56 years in a row. The stock is attractively valued at 16.30 times earnings, yields 3.20% and has an adequately covered distribution. However, the dividend growth rate over the past decade makes me want to wait for higher yields before I consider initiating a position in the stock. (analysis[25])

*Full Disclosure: Long WAG, XOM, GWW,FDO, LOW, APD*