There’s more involved than just chasing yields.
Many dividend investors simply look for a stock with the biggest yield. That can be dangerous since dividend yield is simply a math equation: divide annual payout by current share price. Payouts can soar because a stock’s share price is crashing while payouts stay the same. Dividend growth, then, is a better measure of true long-term success for an investor. There are a bunch of companies that may not pay an incredibly generous dividend when you look at the current yield, but looking at a longer time frame will show a consistent commitment to higher payouts. These 10 companies have at least doubled their dividend in the last 10 years.
Visa, Inc. (NYSE: V)
Visa is not a credit card company, but a payment processor. Every time you swipe that plastic card or order something online, Visa gets a tiny fee for connecting your financial accounts with the company you’re doing business with. As the world keeps going cashless, that’s a great business to be in. So it’s no surprise that Visa’s dividend has soared roughly eight-fold since its first dividends immediately after its 2008 IPO. Its shares have also surged about 800 percent since the end of 2008, delivering a handy profit to those early investors.
Current dividend: 42 cents a share, yielding 0.7 percent
Dividend growth since 2008: 701 percent
Microsoft Corp. (MSFT)
You may not expect to find a tech company on this list, but Microsoft started paying dividends in earnest in the 2000s, and really started to ramp up those payments in the last 10 years or so. As a cash-rich business with great margins and a powerful enterprise brand, it’s easy for Microsoft to dedicate more capital to its shareholders without sacrificing growth potential or losing market share. That’s evidenced by a dividend that has surged since 2008.
Current dividend: 42 cents a share, yielding 1.8 percent
Dividend growth since 2008: 223 percent
Cisco Systems (CSCO)
Cisco instituted its dividends in 2011. But after that initial payday of 6 cents a quarter, CSCO has rapidly ramped up its dividend growth to now pay 33 cents a share after a nearly 14 percent bump in payouts announced on Feb. 14. Not only does the IT giant yield a nice amount, but it has steadily increased payouts and is clearly committed to that trend. And with that payout roughly half of its profits, CSCO stock has plenty of room to grow its dividend even more in the years ahead.
Current dividend: 33 cents a share, yielding 3 percent
Dividend growth since first payment in 2011: 450 percent
Home Depot (HD)
You might think that a housing downturn would create havoc for home improvement retailer Home Depot. But despite the Great Recession and several years of pain for real estate prices, HD stock managed to keep raising its dividend impressively. Specifically, payouts went from 22.5 cents at the end of 2008 to 89 cents as of the last distribution. And with a booming housing market in 2018, shareholders can rest easy that those dividends are secure going forward, too.
Current dividend: 89 cents a share, yielding 1.9 percent
Dividend growth since 2008: 297 percent
Texas Instruments (TXN)
Another company that may surprise with how dramatically it has increased its dividend over the last 10 years is semiconductor company Texas Instruments. Thanks to consolidation across this chip-making subsector of the technology industry, as well as strong demand for semiconductors, TXN has put together an impressive return and dividend growth. As a $100 billion tech giant second only to $200 billion chipmaker Intel Corp. (INTC) in market capitalization, there’s good reason to expect TXN has what it takes to keep paying those dividends for some time.
Current dividend: 62 cents a share, yielding 2.4 percent
Dividend growth since 2008: 463 percent
Hormel Foods Corp. (HRL)
Processed foods giant Hormel has grown aggressively over the last decade, including its MegaMex joint venture into Mexican foods and its $775 million acquisition of meat processor Applegate Farms. The result has been steadily increasing revenue and profits for shareholders. The stock has split twice in the last decade, but adjusted for those splits the dividend has grown handsomely. And this consumer staples giant is sure to be on firm footing, given its broad reach into pantries and refrigerators across America.
Current dividend: 18.75 cents a share, yielding 2.2 percent
Dividend growth since 2008: 194 percent
Ingersoll Rand (IR)
This industrial giant is the company behind a variety of things, including temperature-controlled truck trailers and Trane heating and air conditioning units. These businesses provide reliable revenue. Thanks to continued acquisitions and expansion, Ingersoll Rand has been able to deliver bigger dividends to shareholders over the last decade. Its shares haven’t done too bad either, with IR stock up more than 400 percent since the end of 2008 to more than double the returns of the broader Standard & Poor’s 500 index.
Current dividend: 45 cents a share, yielding 2 percent
Dividend growth since 2008: 150 percent
McDonald’s Corp. (MCD)
Fast-food giant McDonald’s may not be as fashionable as some other trendy restaurants, but don’t count out this stock. This Big Mac and Egg McMuffin powerhouse generates some $27 billion in revenue and $5 billion in annual revenue. With a reliable baseline of sales, MCD stock has been able to consistently increase its dividend since 2009. And with a strong brand and loyal customers, that dividend is very safe going forward.
Current dividend: $1.01 a share, yielding 2.5 percent
Dividend growth since 2008: 101 percent
Walmart (WMT)
As the king of the big box stores, Walmart has a scale unrivaled by any other stock in the sector. With more than $480 billion in annual revenue, it’s the largest U.S. corporation if you’re ranking by sales. While the e-commerce age and competition from Amazon.com (AMZN) has admittedly challenged Walmart since the Great Recession, as evidenced by a recent earnings miss and deep sell-off of shares, the company has plenty of staying power. Walmart has a tremendous balance sheet that provides stability for investors, as well as a great flow of cash to fuel dividend growth.
Current dividend: 51 cents a share, yielding 2 percent
Dividend growth since 2008: 114 percent
American States Water Co. (AWR)
This $2 billion water utility is an under-the-radar dividend stock that operates mainly in the American West. As drought has become more of an issue and reliable sources of water are increasingly in demand in these regions, it has been a very good decade for American States Water. Utilities are often the most reliable source of dividends given that they have monopoly-like businesses and reliable revenue from customers that use their services regardless of broader economic conditions. That means the future is bright for this company.
Current dividend: 25.5 cents a share, yielding 2 percent
Dividend growth since 2008: 104 percent
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10 Stocks That Have Doubled Their Dividend in 10 Years originally appeared on usnews.com
