In this article, we discuss the 10 best dividend stocks with over 10 years of dividend increases.
Dividend growth is one of the most important factors income investors should pay attention to, especially during financially volatile times like the ones we are living through these days. According to a latest study by Intelligent Capitalworks, companies that have initiated or grown dividends over time also show capital growth and outperform a cohort of stocks that have either sporadic dividend growth policies or those that cut their dividends. The same study also discusses in detail the magical effects of dividend reinvestments especially when it comes to companies that have a history of consistent dividend increases. For example, the study says that if you had invested $100 in Realty Income, a monthly dividend stock which is also a dividend aristocrat, your investment would have been inflated to $2,700 by now. Number of years of consistent dividend growth is an extremely important metric especially for those investors who want to enjoy the benefits of reinvested dividends.
The study mentioned above also scrutinized and compared in detail the performance of dividend growers and those companies that cut their dividends from 1980 until 2015. Dividend growers easily outperformed the companies that failed to maintain their dividend growth record in this period. The paper says that the companies that grow their dividends consistently recovered faster than their counterparts in the study. One of the primary reasons behind this, according to the study, was that the dividend acted as a “cushion” and supported the stock prices of these dividend-paying companies. This can be seen from the current market situation as well, as dividend stocks are in huge demand this year because investors are looking for steady income sources amid recession fears. This increased interest from investors is in turn supporting the stock prices of dividend-paying companies.
Methodology
We picked stocks that have solid fundamentals and a history of consistent dividend increases.
Best Dividend Stocks With Over 10 Years of Dividend Increases
10. American Electric Power Company, Inc. (NASDAQ:AEP)
American Electric Power Company, Inc. (NASDAQ:AEP) is one of the best and stable dividend achievers in the market. The company has raised its payout consistently since 2009. Its latest dividend increase came last month, when it declared a dividend of $0.83 per share, a 6.4% increase from its previous dividend. The forward dividend yield of the stock came in at 3.81%. As of the end of the second quarter of this year, 30 hedge funds tracked by Insider Monkey had stakes in the company, compared to 33 funds in the previous quarter. The total value of these stakes was $458 million.
Here is what ClearBridge Investments Value Equity has to say about American Electric Power Company, Inc. (NASDAQ:AEP) in its Q1 2022 investor letter:
“About 5% of the portfolio is in transitioning power companies, typically migrating from coal to renewables. We have been active in encouraging these transitions and added a new position in American Electric Power (NASDAQ:AEP). AEP has the fastest planned renewable energy ramp in the U.S., with plans to both shrink coal and grow renewables by 50% each by 2030. This would drive an 80% emissions reduction, while supporting high single-digit earnings growth at a double-digit return.”
9. Federal Agricultural Mortgage Corporation (NYSE:AGM)
The Federal Agricultural Mortgage Corporation (NYSE:AGM), which is commonly known as Farmer Mac, operates in the mortgage market for agricultural real estate and rural housing. The Federal Agricultural Mortgage Corporation (NYSE:AGM) has a dividend yield of about 3.9% as of November 5. The Federal Agricultural Mortgage Corporation (NYSE:AGM) is one of the best dividend achievers in the market, as it has increased its payout for over a decade now. In August, the Washington DC-based company had announced a dividend of $0.95 per share. This quarterly dividend was payable on September 30 to shareholders of record as of September 15.
As of the end of the second quarter of this year, 7 hedge funds tracked by Insider Monkey reported owning stakes in the company.
8. Assurant, Inc. (NYSE:AIZ)
New York-based risk management company Assurant, Inc. (NYSE:AIZ) has a dividend yield of about 2.24% as of November 5. This dividend achiever has increased its dividend consistently for the last 17 years. Assurant, Inc. (NYSE:AIZ) has lost about 22% year to date as of November 5, and some analysts believe it’s undervalued now. Recently, the company posted adjusted EPS of $1.01 for the third quarter, beating the Street estimates by $0.01. Assurant, Inc. (NYSE:AIZ) ’s management said that it is taking steps to cut costs and increase efficiency in the current macroeconomic environment. The company is hopeful that it will be able to show growth and profits in 2023.
7. ALLETE, Inc. (NYSE:ALE)
Minnesota-based energy company ALLETE, Inc. (NYSE:ALE) is a high-yield dividend stock, as its yield stands at about 4.7% as of November 5. In October, ALLETE, Inc. (NYSE:ALE) declared a quarterly dividend of $0.65 per share, in line with its previous dividend.
Hedge fund sentiment for ALLETE, Inc. (NYSE:ALE) saw a rise in the second quarter this year. A total of 22 hedge funds out of the 895 funds tracked by Insider Monkey reported having stakes in the company, up from 16 funds in the previous quarter. The total value of these stakes was $107.2 million. Billionaire Israel Englander’s hedge fund increased its stake in the company by 282% in the second quarter. The fund has a $43.3 million stake in the company as of the end of June.
6. Air Products and Chemicals, Inc. (NYSE:APD)
In February this year, Air Products and Chemicals, Inc. (NYSE:APD) announced yet another dividend hike. This marked the 40th consecutive annual dividend hike from the company. This makes the company one of the best dividend stocks to buy and hold during these turbulent economic times. Recently, the company posted strong fiscal fourth-quarter earnings and revenue, beating estimates. Air Products and Chemicals, Inc. (NYSE:APD) also increased its guidance for fiscal 2023 of adjusted earnings.
As of the end of the second quarter, 33 hedge funds tracked by Insider Monkey reported having stakes in Air Products and Chemicals, Inc. (NYSE:APD). The total value of these stakes was $375 million. Billionaire Izzy Englander’s Millennium Management owns a $120 million stake in the company.
Here is what Madison Funds specifically said about Air Products and Chemicals, Inc. (NYSE:APD) in its Q2 2022 investor letter:
“This quarter we are highlighting Air Products and Chemicals, Inc. (NYSE:APD) as a relative yield example in the Materials sector. APD is a leading global industrial gas supply company and is the largest supplier of hydrogen and helium in the world. It has a sustainable competitive advantage due to long-term customer relationships and contracts, high customer switching costs, and the missioncritical nature of its products. Industrial gases are a relatively small fraction of customers’ overall costs but are crucial to ensure uninterrupted production.
Our thesis on APD is that it appears well-positioned for consistent double-digit growth due to a large multi-year capital allocation plan, and the need for accelerating capital expenditures by its customers. It has a $25 billion backlog driven by traditional gas investments along with new growth opportunities like gasification, green hydrogen, and carbon capture. APD’s gasification technologies help improve energy efficiency and independence, which is a key focus for its customers. The company also has a strong management team with a record of expanding margins and exemplary capital allocation.
The fund purchased APD in June 2022 at $260. At the time of purchase, APD had a dividend yield of 2.6% and a relative dividend yield of 1.6x the S&P 500, which was near the high end of its historical range. The chart below shows the long-term dividend yield and relative dividend yield of the stock. The company has an A-rated balance sheet by Standard & Poor’s and is a Dividend Aristocrat that has raised its annual dividend 40 years in a row. Over the past five years, APD has increased its dividend an average of 11.5% per year. We expect similar dividend increases in the future which would help grow income and protect against the impact of inflation.”
5. Alexandria Real Estate Equities, Inc. (NYSE:ARE)
Alexandria Real Estate Equities, Inc. (NYSE:ARE) is a California-based REIT. As of November 5, the company has a dividend yield of about 3.24%. The company has increased its dividend for 11 straight years. Last month, the company posted strong third quarter results. Its adjusted FFO per share came in at $2.13 per share, compared to the consensus estimate of $2.11. The company’s third-quarter results were helped by an increase in leasing activity and a hike in rents. Rental rate increases in the period jumped about 27.1% in the third quarter. However, it was down from 45.4% seen in the second quarter. As of the end of the second quarter, 32 hedge funds tracked by Insider Monkey reported owning stakes in the company. The total value of these stakes was about $716 million.
Here is what Baron Health Care Fund has to say about Alexandria Real Estate Equities, Inc. (NYSE:ARE) in its Q2 2022 investor letter:
“Health care related company Alexandria Real Estate Equities, Inc. is responsible for about a quarter of the relative shortfall in the period. Life sciences REIT Alexandria was the third largest detractor despite reporting strong financial results as investors grew concerned that financial duress among certain biotechnology companies could ultimately lead to rent delinquencies and less demand for Alexandria’s real estate.”
4. Avista Corporation (NYSE:AVA)
Avista Corporation (NYSE:AVA) is an energy company that has grown its dividend for the last 20 years. Avista’s dividend yield is also healthy, coming in at 4.7% as of November 5. Recently, the company announced its dividend of $0.44 per share, in line with the previous dividend. The dividend is payable on December 15 for shareholders of record as of November 18. The dividend announcement came despite weak Q3 results. The company posted a surprise GAAP loss for the third quarter and also slashed its earnings estimates for 2022 and 2023. The company clearly said that the “pressures of inflation and rising interest rates” were the main causes of this weak performance.
3. AXIS Capital Holdings Limited (NYSE:AXS)
AXIS Capital Holdings Limited (NYSE:AXS) is a financial services company that offers property insurance products. 2021 marked the 18th consecutive year of AXIS Capital Holdings Limited (NYSE:AXS)’s dividend increases. Like other major players in the industry, Axis also took a beating in the third quarter due to the changing macroeconomic environment. AXIS Capital Holdings Limited (NYSE:AXS)’s adjusted EPS in the third quarter came in at $0.03, missing the Street estimates by $0.04. Net premiums in the period plummeted by 22.4% to reach $1.04 billion, missing the estimates by $40 million.
As of the end of the second quarter of this year, 16 hedge funds in the database of Insider Monkey reported having stakes in the period, compared to 23 funds in the previous quarter.
2. Cardinal Health, Inc. (NYSE:CAH)
American healthcare services giant Cardinal Health, Inc. (NYSE:CAH) is one of the very few stocks that managed to not only survive this year but also thrive beyond expectations despite the rising inflation and interest rates. The stock is up more than 50% year to date. The company has increased its dividends consistently for the last 30 years. The stock is currently in the limelight after the company posted strong fiscal first quarter 2023 results. After the results, Bank of America upgraded the stock to Neutral from Underperform. BofA’s team of analyst, led by Michael Cherny, said that it expects the company’s core pharma distribution market to benefit from multiple factors, including stable volumes and potential near-term upside from the flu season.
1. Caterpillar Inc. (NYSE:CAT)
Construction equipment giant Caterpillar Inc. (NYSE:CAT) is one of those stocks that offer consistent dividend payments as well as stock appreciation prospects. The company has upped its dividend payouts consistently for the last 28 years. Caterpillar’s dividend yield is about 2.1% as of November 5. The stock is up 10% year to date. Caterpillar Inc. (NYSE:CAT) recently said that its earnings in the third quarter reached a record, thanks to the increasing demand for its earth-moving equipment and strong pricing power.
As of the end of the second quarter, 45 hedge funds tracked by Insider Monkey reported having stakes in Caterpillar, compared to 54 in the previous quarter.
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Disclosure: None. 10 Best Dividend Stocks With Over 10 Years of Dividend Increases is originally published on Insider Monkey.
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