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?
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 15% or more over the last year:
|Company||1-Year Dividend Growth Rate|
|Halliburton Company (NYSE:HAL)||19.4%|
|V.F. Corporation (NYSE:VFC)||19.4%|
|Magellan Midstream Partners, L.P. (NYSE:MMP)||19.2%|
|Service Corporation International (NYSE:SCI)||19%|
|NIKE, Inc. (NYSE:NKE)||15.7%|
Halliburton Company (NYSE:HAL) is one of the world’s largest providers of products and services to the energy industry, with more than 75,000 employees in approximately 80 countries. The company serves the upstream oil and gas industry throughout the lifecycle of the reservoir — from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field. CAPS participants have awarded Halliburton Company (NYSE:HAL) with a top five-star rating, and the company is paying out a growing 1% dividend.
V.F. Corporation (NYSE:VFC) is an apparel and footwear powerhouse, with a diverse portfolio of brands including The North Face, Nautica, Timberland, JanSport, Wrangler, and Lee, among others. V.F. Corporation (NYSE:VFC) sports a five-star rating in CAPS and is yielding 1.8%.
Magellan Midstream Partners, L.P. (NYSE:MMP) owns the longest refined petroleum products pipeline system in the United States. It can tap into more than 40% of the nation’s refining capacity and store 80 million barrels of petroleum products such as gasoline, diesel fuel, and crude oil. Magellan Midstream Partners, L.P. (NYSE:MMP)’s primarily fee-based business generates strong cash flows that the MLP passes on to its investors in the form of a 3.9% cash distribution, helping Magellan Midstream Partners, L.P. (NYSE:MMP) earn a four-star rating in CAPS.