When mulling over your newly opened retirement plan, or the one you just rolled over, you’ve got some big decisions to make. Hire outside help? Manage it yourself? And if you do the latter, that opens up a whole ‘nother can of worms.
My thought: If you’re going with the DIY approach, and you have at least 10 years until your hope-for retirement date, you might want to consider using a dividend growth approach to investing in individual stocks. Dividends are a huge part of the total return of stocks over the long term, and those that can consistently raise their payouts year after year have historically performed much better than those that did not regularly increase the payout to shareholders.
Starting with portfolio of dividend growth stocks with a decent yield and strong payout improvement history can help put your retirement plans within reach. I personally recommend these three dividend growth stocks to buy and hold while the quarterly checks pile up.
Dividend Growth Stocks to Buy: Helmerich & Payne (HP)
Dividend Yield: 2.4%
Helmerich & Payne (HP) is among the ranks of solid dividend growth stocks you should consider for your retirement account.
Helmerich & Payne is a contract driller for the oil and gas industry. While the bulk of HP’s activity is in the United States, it also has operations in Ecuador, Colombia, Argentina, Tunisia, Bahrain and the United Arab Emirates.
The shale field explosion has given Helmerich & Payne a substantial advantage over competitors, as it has rigs better suited for this type of drilling. As a result, H&P has had higher utilization rates and has earned higher day rates than many other drillers in the U.S.
While the stock’s 2.4% yield is nothing to scream about, its dividend growth rate sure is — HP’s payout has grown more than 900% (from 6 cents to 62.5 cents quarterly) since 2011! While dividend growth likely won’t continue at that rate, you should expect a much better yield on cost the longer you hold HP stock.
Dividend Growth Stocks to Buy: Tupperware (TUP)
Dividend Yield: 3.3%
All of us are familiar with Tupperware (TUP), and most of us probably have some of the company’s storage containers somewhere in the cupboards.
What most of us are not as aware of is that Tupperware is actually an emerging-market growth story today, not just a staid old direct-sales company. As emerging-market countries develop more of a middle class, the demand for things like food storage will explode — just as demand for Tupperware did here in the United States originally.
Of course, Tupperware also makes more than just little square sandwich containers. The company’s offerings now include beauty and personal care products, including skin care products, cosmetics, bath and body care, toiletries, fragrances, jewelry and nutritional products.
TUP stock yields 3.3% at current prices, but what really puts this among the strongest dividend growth stocks is the fact that its payout has more than doubled in the past two years alone. Meanwhile, analysts expect Tupperware to increase its payout at a double-digit rate over the next several years.
And, as a bonus, management also has been buying back stock to return money to shareholders.
Dividend Growth Stocks to Buy: Blackstone Group
Dividend Yield: 4%
The Blackstone Group (BX) is one of the largest alternative asset managers in the world today. The company offers and manages hedge funds and private equity funds, and also has credit and advisory services for the other companies in the industry. The firm saw its asset under management grow to record levels on 2013, and there is no reason Blackstone shouldn’t continue that trend going forward.
In the aftermath of the credit crisis and real estate collapse the firm has concentrated on building up its real estate investment business, and that is now the largest component of the firm. The profit potential for the investments bought at very low levels is enormous, and the incentive fees they earn on those funds will be passed onto investors in the form of dividends in the future.
BX stock yields 4% at current prices, and Blackstone more than doubled its annual payout from 2012 to 2013. Moreover, the firm is expected to grow the payout by more than 15% annually for the next several years at least — putting Blackstone firmly among a group of dividend growth stocks you should consider snapping up.