WellPoint, Inc. (WLP), CME Group Inc (CME), Mattel, Inc. (MAT): 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?

Mattel, Inc. (NASDAQ:MAT)

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 20% over the last year:

Company 1-Year Dividend Growth Rate
CME Group Inc (NASDAQ:CME)
24.3%
Mattel, Inc. (NASDAQ:MAT)
24.1%
Texas Roadhouse Inc (NASDAQ:TXRH)
23.5%
WellPoint, Inc. (NYSE:WLP)
23.3%
Harris Corporation (NYSE:HRS)
21.3%

Source: S&P Capital IQ.

CME Group Inc (NASDAQ:CME) operates the leading global exchange and clearinghouse for futures contracts that financial institutions, corporations, governments, and traders use to manage risk. CME Group Inc (NASDAQ:CME) currently has a four-star ranking on CAPS and offers investors a 2.5% yield.

Mattel, Inc. (NASDAQ:MAT) is the worldwide leader in the design, manufacture, and marketing of toys and family products, with a global distribution network that spans across more than 150 nations. Mattel, Inc. (NASDAQ:MAT)’s best-selling brands include Barbie, Hot Wheels, Monster High, American Girl, Thomas & Friends, and Fisher-Price. Fools have given the toymaker a four-star rating in CAPS, and its stock is yielding 3.5%.

Texas Roadhouse Inc (NASDAQ:TXRH) is a full-service, casual-dining restaurant chain that offers an assortment of specially seasoned steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. With about 400 steakhouses in the U.S. and internationally and plans to eventually reach 800 locations, Texas Roadhouse Inc (NASDAQ:TXRH) has a long runway for growth ahead.