The Home Depot, Inc. (HD), Accenture Plc (ACN), Moody’s Corporation (MCO): Stocks Growing Their Dividends by 20% Per Year

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 20% or more over the last year:

Company 1-Year Dividend Growth Rate
The Home Depot, Inc. (NYSE:HD) 21.4%
Accenture Plc (NYSE:ACN) 20%
Moody’s Corporation (NYSE:MCO) 20%
Safety Insurance Group, Inc. (NASDAQ:SAFT) 20%
Target Corporation (NYSE:TGT) 20%

Source: S&P Capital IQ

The Home Depot, Inc. (NYSE:HD) is the world’s largest home improvement specialty retailer, with more than 2,200 retail stores in the United States, Canada, and Mexico.

The Home Depot, Inc. (NYSE:HD)

Its stores sell home improvement products, building materials, and lawn and garden products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me, and professional customers. The Home Depot, Inc. (NYSE:HD) currently has a three-star ranking on CAPS, and offers investors a 2.1% yield.

Accenture Plc (NYSE:ACN) is a top-tier management consulting, technology services, and outsourcing organization. Its areas of specialization include finance, enterprise performance, systems integration, risk management, sales, and talent management, as well as industry-specific consulting services. Accenture Plc (NYSE:ACN) currently sports a four-star rating in CAPS, and is yielding 2.3%.

Moody’s Corporation (NYSE:MCO) provides credit ratings, research covering debt instruments and securities, as well as software and advisory services for economic analysis and financial risk management. Moody’s Corporation (NYSE:MCO) believes itself to be an essential component of the global capital markets. Fools, however, only see fit to give Moody’s Corporation (NYSE:MCO) a lower-tier two-star rating in CAPS. Still, its stock has outperformed the S&P 500 over the last year, and is yielding a growing 1.6%.

Safety Insurance Group, Inc. (NASDAQ:SAFT) provides private passenger automobile insurance in Massachusetts. It also offers a portfolio of property and casualty insurance products, including commercial automobile, homeowners, fire, umbrella, and business owner policies. CAPS participants have awarded Safety Insurance Group with the highest five-star rating, and the company is paying out a hefty 4.7% dividend yield.

Target Corporation (NYSE:TGT) shoots to be more upscale than rival retailers with a focus on design and innovation. Its stores sell household essentials, sporting goods, toys, electronics, apparel, food, and pet supplies, among many other items. Its stock has a four-star CAPS rating, and is yielding 2.5%. Dividend investors may also find it interesting that Target has paid a dividend every quarter since going public in 1967.

The article 5 Stocks Growing Their Dividends by 20% Per Year originally appeared on 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 Twitter @Tier1Investor. Joe has no position in any stocks mentioned. The Motley Fool recommends Accenture, Home Depot, Moody’s, and Safety Insurance Group.

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