As a dividend investor, current income is amazing. Knowing how much money is coming in every month or year gives you a sense of comfort. This income can be used to pay bills or supplement your wage income. If you were to lose your job or want to take a break, you can rely on this current income. You can also use this income to reinvest in more dividend stocks to grow your income even more.
Even better than the current income, dividend growth companies grow their dividend every year. This is where the magic really happens. The dividend increases multiply the power of your dividends over time and your money works for you instead of you working for your money.
Dividend Growth Results
Dividend growth is king, both in the income it can produce over time, and also on total returns.
A recent study by Ned Davis Research and Hartford Funds at the end of 2022 shows that Dividend Growers & Initiators provided superior returns over the past 50 years, and did it at a lower Beta and Standard Deviation then other investing strategies.
By focusing on dividend growers, you can increase your future income and historically get better risk adjusted returns.
Dividend growth companies continue to increase dividends at a rate greater than inflation. In fact, the S&P 500 companies have raised their dividends higher than inflation in every year since 2013 except for in 2020-2021 due to the Covid disruption.
| Year | Dividend Increase |
| Jun 30, 2023 | 7.33% |
| Dec 31, 2022 | 10.80% |
| Dec 31, 2021 | 3.63% |
| Dec 31, 2020 | 0.07% |
| Dec 31, 2019 | 8.36% |
| Dec 31, 2018 | 9.84% |
| Dec 31, 2017 | 7.07% |
| Dec 31, 2016 | 5.33% |
| Dec 31, 2015 | 10.00% |
| Dec 31, 2014 | 12.72% |
| Dec 31, 2013 | 11.99% |
Similarly, for the 12-month period ending in March 2023, S&P 500 dividends were up 10.1% from the March 2022 period. Source
The dividend increases continue this year, with the following companies raising their dividend significantly just this month:
| NAME | SYMBOL | DIVIDEND INCREASE |
| Hershey’s | HSY | 15.06% |
| Wells Fargo | WFC | 20% |
| Cintas | CTAS | 17.39% |
| Regions Financial | RF | 20.00% |
| ASML | ASML | 28.50% |
| Ryder | R | 14.52% |
—-
Examples of Dividend Growth Kings
Finding which dividend growers to build out your portfolio may seem overwhelming. There are thousands of companies to pick from. To make the process easier, I have compiled a list of dividend growers that have historically provided the highest dividend increases.
I filtered the universe of companies by:
- Minimum of 10 years of dividend growth
- Must have a 5 year dividend growth rate of 10% or more
- The average total returns over the past 10 years have to be 10% or more each year
- Dividend Payout Ratio must be under 90%
With these filters, here are the top 30 highest dividend growth companies:
| NAME | SYMBOL | NUMBER OF YEARS OF INCREASES | 5 YR AVG DIVIDEND CAGR | DIVIDEND PAYOUT % |
| Linde Plc. | LIN | 31 yrs | 35.91% | 33.80% |
| FS Bancorp Inc | FSBW | 10 yrs | 30.42% | 20.82% |
| Nexstar Media Group Inc | NXST | 10 yrs | 29.20% | 18.13% |
| Tractor Supply Co. | TSCO | 14 yrs | 27.98% | 36.02% |
| Greene County Bancorp Inc | GCBC | 10 yrs | 24.89% | 8.25% |
| Insperity Inc | NSP | 13 yrs | 22.76% | 35.68% |
| Primerica Inc | PRI | 13 yrs | 21.06% | 15.13% |
| Masco Corp. | MAS | 10 yrs | 20.43% | 30.04% |
| Pool Corporation | POOL | 13 yrs | 20.11% | 29.17% |
| Booz Allen Hamilton Holding Corp – Ordinary Shares – Class A | BAH | 12 yrs | 19.86% | 34.18% |
| Cintas Corporation | CTAS | 40 yrs | 19.52% | 34.09% |
| Lowe`s Cos., Inc. | LOW | 50 yrs | 18.65% | 30.22% |
| Broadcom Inc | AVGO | 13 yrs | 18.42% | 40.41% |
| Steel Dynamics Inc. | STLD | 11 yrs | 17.78% | 19.11% |
| Dominos Pizza Inc | DPZ | 11 yrs | 17.08% | 30.92% |
| Morningstar Inc | MORN | 11 yrs | 16.91% | 25.83% |
| ITT Inc | ITT | 11 yrs | 16.70% | 20.93% |
| Microchip Technology, Inc. | MCHP | 20 yrs | 16.67% | 23.64% |
| Unitedhealth Group Inc | UNH | 14 yrs | 16.14% | 26.90% |
| Sherwin-Williams Co. | SHW | 46 yrs | 16.11% | 23.04% |
| Williams-Sonoma, Inc. | WSM | 17 yrs | 15.92% | 25.65% |
| Kroger Co. | KR | 17 yrs | 15.72% | 25.69% |
| Brunswick Corp. | BC | 11 yrs | 15.45% | 14.89% |
| Visa Inc – Ordinary Shares – Class A | V | 14 yrs | 15.39% | 18.35% |
| Best Buy Co. Inc. | BBY | 20 yrs | 15.38% | 53.51% |
| Blue Ridge Bankshares Inc (VA) | BRBS | 10 yrs | 15.34% | 5.68% |
| Home Depot, Inc. | HD | 14 yrs | 15.20% | 52.46% |
| Nordson Corp. | NDSN | 59 yrs | 14.87% | 26.43% |
| Reliance Steel & Aluminum Co. | RS | 13 yrs | 14.87% | 21.37% |
| American Tower Corp. | AMT | 13 yrs | 14.46% | 55.99% |
For a company to accomplish these dividend growth rates over time and having competitive 10 year total returns shows how strong these dividend growth companies are.
Summary
If you have time to let your companies grow and increase the dividends, the future dividend payouts will be exponentially higher than taking a higher current dividend today. To better understand this concept, check out this article I wrote last year discussing how your timeline should reflect your dividend yield and growth choices.
These companies are not recommendations, please do your own due diligence and remember past performance is not guaranteed to continue in the future.