Three Large-Caps With 20% Dividend Growth: Walgreen Company (WAG), Cummins Inc. (CMI), Union Pacific Corporation (UNP)

Ride the rails

When it comes to Union Pacific Corporation (NYSE:UNP) you don’t have much to worry about at all.  Last year the company reported record results, with 2012 being the most profitable year in the company’s 150-year history. Union Pacific reported full-year diluted earnings per share of $8.27, an increase of 23% versus 2011. These strong earnings came on the back of a 7% increase in operating revenue. While Union Pacific Corporation (NYSE:UNP) did see weakness in its coal shipments, like the other railroads, it showed strength in the volumes of its chemicals, automotive, and intermodal shipments.

This kind of financial performance has allowed Union Pacific to handsomely reward its shareholders with generous dividend increases over the past several years. The stock raised its dividend 15% late last year, and has increased its distribution by almost 25% compounded annually over the past five years.

If you can’t beat ‘em, join ‘em

It’s entirely possible to find extremely high dividend growth rates among the market’s large-cap universe. These might be large companies, but each of these stocks effectively defies the notion that only small companies have the financial flexibility to raise their payouts at market-surpassing rates.

Walgreen Company (NYSE:WAG), Cummins Inc. (NYSE:CMI), and Union Pacific Corporation (NYSE:UNP) are poised to profit handsomely from the economic recoveries in the United States and abroad. Furthermore, none of these stocks are exorbitantly priced, considering the compelling dividend growth each has offered its investors over the past five years.  Also, these stocks don’t offer pittances for yields like many other high dividend-growth stocks.  Rather, each of these stocks offers solid current annualized yields between 2% and 3%.

These stocks are an interesting alternative to higher-yielding stocks that offer little dividend growth over time. If you’re an income investor in the pursuit of an ever-increasing stream of dividend income plowed into your portfolio year after year, this group of stocks is a great starting point for further research.

The article Three Large-Caps With 20% Dividend Growth originally appeared on Fool.com and is written by Robert Ciura.

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