Everyone loves a strong dividend. They provide a certain (albeit small) degree of safety and it puts money in our pocket. However, it’s not enough to Google “dividend stocks” and buy the first few names that pop up. Nor can we just chase high yields because they look attractive.
We need to consider the safety of that dividend, the history of the company and its financials. Further, income investors will want to look for companies that consistently increase their dividend yields too. For example, Dividend Aristocrats are stocks that have raised their dividends for 25 consecutive years or more.
These stocks are generally considered to have a “safe” payout, which is good for investors. However, we wanted to go a step further and find stocks that were giving big raises to their payouts. Specifically, I combed over the dividend aristocrats that have a compound annual growth rate (CAGR) over 10% for the previous five years and ten years. Finally, we need a payout of at least 1.75%.
These are the dividend stocks I came up with.
Lowe’s has a five-year dividend CAGR of 21.25% and a ten-year CAGR of 18.5%. Those are some strong numbers for a company that’s often in the shadow of HD. Finally, the company gave a 17.1% boost to its payout last June, so investors can expect another bump in a few months.
We like digging out dividend stocks like this because — not only are the businesses generally consistent — but it maximizes our odds of getting big boosts in our income.
As it stands, analysts expect revenue to grow 1.7% this year and 3.5% next year. On the earnings front though, LOW is forecast to grow 18.8% this year and 15.5% next year. That’s pretty impressive and should help keep that dividend yield growing over the next few years.
Dover (NYSE:DOV) is just a few dollars off its all-time high. With its $13 billion market cap and low profile though, many investors likely miss the fact that it has raised its dividend for a whopping 63 consecutive years.
While Dover raised its dividend just 2.1% last August, the company has been massively consistent with its payout bumps. Over the past five and ten years, Dover sports a dividend CAGR of 35.6% and 11.8%. Talk about strong growth! Shares currently yield 2.13% at current levels, about in-line with its five-year average yield of 2.2%.
The dividend isn’t the only consistent thing about Dover, which is an industrial goods provider. Analysts expect sales to grow 3.2% this year and 3.6% next year, working alongside 15.3% earnings growth this year and 7.3% growth next year.
As consistent as Dover is, investors can likely nab this one on a discount. Shares are up almost 50% from the December lows and the valuation is trading at a premium. That said, it’s one to keep on the radar.
Some investors disregard this “sin stock,” but many simply can’t pass up Altria (NYSE:MO) and its 5.7% dividend yield.
This company has been known for its dividend and big payouts over the years, even though the stock has been coming under pressure lately. The increase in volatility comes as MO looks for ways diversify its business and generate growth. For example, it’s made recent investments in companies like Juul, as well as Cronos Group (NASDAQ:CRON).
In August, MO increased its dividend by more than 14%, up from last year’s 8.2% increase. This year’s increase will be extra special though, as it will put MO in the 50-year club for consecutive annual dividend increases.
On a CAGR basis, MO sports five-year and ten-year figures of 10.3% and 10%. Simply put, love MO or hate it, this company has been a dividend stud and later this summer, that streak will extend to five decades.
Yielding just under 2%, it doesn’t have a big payout. However, that hasn’t stopped management from increasing its payout in recent years.
In November, HRL gave a 12% bump to the dividend, following a 10.3% increase in the prior year. HRL’s dividend sports a five-year and ten-year CAGR of 17.25% and 15.2%, respectively. For a company that’s not only paid but raised its dividend for 52 years, that’s pretty darn impressive.
While current expectations call for 1.8% sales growth this year and a 3.7% decline in earnings, estimates for next year are better. Analysts expect sales to jump 2.8% and for earnings to climb 6.6%. Perhaps on a pullback into the low-$40s, investors will be more interested in the name.
3M Co (MMM)
Analysts at Deutsche Bank recently suggested investors sell 3M Co (NYSE:MMM) and buy Honeywell (NYSE:HON) instead. There’s nothing wrong with that, although income-only investors may want to think twice before engaging in that strategy.
3M has not only paid but raised its dividend for six decades and also yields more than 2.8%.
In February, investors got a modest ~6% dividend increase. That may have been a bit disappointing after the company gave a 16% bump to its quarterly payout a year before. In either case, MMM management remains intent on giving its investors a notable raise each year.
Over the last five years, MMM’s dividend has a CAGR of 16.8%, while its ten-year CAGR stands at 10.9%. 3M Co. may not be operating in the prime of its business cycle right now, but its dividend is certainly one reason to stick with it. Earnings expectations call for just 1.3% growth this year and more than 8% growth next year. Should the Chinese and global economies pick up pace, MMM should benefit.
Unlike some of the names of this list, nearly every reader is familiar with Target (NYSE:TGT). The company is doing all it can to compete with Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN), and still run a profitable outfit. That said, it’s also looking to keep up the solid dividend work.
Shares currently yield 3.26%, but because of the company’s other technology investments, it has not upped its dividend at the same rate as some of the other companies on this list. Make no mistake though, TGT is anything but disappointing with its five-year and ten-year dividend CAGR of 9.96% and 15.8%, respectively.
TGT stock trades at roughly 13.5 times this year’s earnings, where analysts expect growth of 8.3%. Next year, estimates call for 6.7% growth. That’s a reasonable price to pay for solid growth and a company that’s raised its dividend 51 consecutive years. Target stock may be one to buy on dips going forward.
VFC Corp (VFC)
Shares of VFC Corp (NASDAQ:VFC) have been plateauing after a strong earnings report in January. Perhaps it’s feeling pressure from the poor earnings results of Guess (NYSE:GES) and the recent Levi Strauss (NYSE:LEVI) IPO.
In any regard, the stock is still $12 below its 52-week high of $97. That gives VFC stock a 2.4% dividend yield, which is not bad for a company that’s set to grow earnings almost 20% this year and is forecast to grow that figure another 13% next year.
That’s even more true considering the dependability of that payout. Through multiple recessions, periods of high inflation and otherwise, VFC has found a way to raise its dividend for an impressive 46 consecutive years. In October, management gave investors a 10.9% dividend increase. That follows the 9.5% increase from the prior year.
In all, VFC has a five-year dividend CAGR of 15.7%. Its ten-year CAGR sits a little lower at 12.7%. Impressive figures for a company that’s still finding ways to drum up strong growth.