Ecolab Inc. (ECL), Fastenal Company (FAST), CSX Corporation (CSX): Other Reasons To Value Dividend Growth So Highly

Dividend investors would be wise to focus not just on a stock’s current yield, but also on the long-term growth potential of its dividends. That’s because strong businesses that consistently raise their dividend payouts reward shareholders with a steadily rising income stream that essentially equates to a raise every year. And, well, who doesn’t like a raise?

Ecolab Inc. (NYSE:ECL)

But there are other reasons to value dividend growth so highly, and they’re well supported by research. For instance, a study by C. Thomas Howard published in Advisor Perspectives found that for every percentage point a stock’s yield rises, its annual return increases by 0.22 percentage points if it’s a large cap, 0.25 if it’s a mid cap, and 0.46 if it’s a small cap. Even better, Howard found that dividend-growing stocks outperformed dividend cutters by 10 percentage points per year from 1973 to 2010 and beat both flat- and no-dividend stocks. And the icing on the cake is that Howard showed that this outperformance came with a third less volatility. Higher returns, less volatility-induced stress, and a steadily growing income stream — what’s not to love?

With that in mind, here are five stocks that have grown their dividends by more than 10% over the past year.

Company 1-Year Dividend Growth Rate
Ecolab Inc. (NYSE:ECL)
14.8%
Fastenal Company (NASDAQ:FAST) 14.8%
CSX Corporation (NYSE:CSX)
14%
Huntsman Corporation (NYSE:HUN)
12.5%
Teck Resources Ltd (USA) (NYSE:TCK)
12.5%

Source: S&P Capital IQ.

Ecolab Inc. (NYSE:ECL) provides cleaning and related products and services to the hospitality, food-service, health-care, and industrial markets. CAPS participants have awarded Ecolab Inc. (NYSE:ECL) with a top five-star rating, and the company is paying out a growing 1% dividend.

Fastenal Company (NASDAQ:FAST) operates as a wholesaler and retailer of industrial and construction supplies. Its product lineup includes fastener products such as bolts, nuts, screws, studs, and related washers; and miscellaneous supplies and hardware consisting of various pins and machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. Fastenal Company (NASDAQ:FAST) currently has a four-star ranking on CAPS and offers investors a 2.2% yield.

CSX Corporation (NYSE:CSX) provides rail, intermodal, and rail-to-truck services that together help to make it one of the leading transportation companies in the United States. Fools appreciate the wide competitive moat surrounding CSX Corporation (NYSE:CSX)’s rail network — as well as its rising 2.4% dividend — and have given it a top five-star rating in CAPS.

Huntsman Corporation (NYSE:HUN) is a global manufacturer of organic and inorganic chemical products including polyurethane chemicals, epoxy resin compounds and formulations, textile chemicals and dyes, and titanium dioxide. Huntsman Corporation (NYSE:HUN) sports a four-star rating in CAPS and is yielding 2.8%.

Teck Resources Ltd (USA) (NYSE:TCK) engages in the exploration, acquisition, and production of natural resources, including copper, steelmaking coal, gold, silver, and specialty metals. In addition, it holds ownership interests in oil sands projects in the Athabasca region of Alberta. Teck Resources Ltd (USA) (NYSE:TCK) has a four-star CAPS rating and offers investors a 3.4% dividend.

The article 5 Stocks Growing Their Dividends by More Than 10% Per Year originally appeared on Fool.com and is written by Joe Tenebruso.

Joe Tenebruso manages a Real-Money Portfolio for The Motley Fool and is an analyst on the Fool’s Stock Advisor and Supernova premium service teams. You can connect with him on TwitterL @Tier1Investor. Joe has no position in any stocks mentioned. The Motley Fool owns shares of CSX and Ecolab.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!