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The Fastest-Growing Dividend Aristocrats

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Dividend-paying companies are an oasis in the desert of underperforming stocks. They offer solid payouts today and the promise of capital gains tomorrow. According to a study by Ibbotson, reinvested dividends made up about 40% of total stock returns from 1926 to 2006. In fact, dividend investing is so appealing that superinvestor Warren Buffett has made it a significant component of his portfolio.

When searching for great dividend stocks, it makes a lot of sense to start with companies that have been playing the dividend game the longest. Standard & Poor's has culled the dividend winners from the also-rans in a list it calls the "dividend aristocrats."

Let's examine the top 25 fastest-growing yields among these dividend aristocrats. For context, I've also included their trailing yield.


5-Year Average Annual Dividend Growth Rate


CenturyLink (NYSE: CTL  ) 63.9% 8.4%
Lowe's (NYSE: LOW  ) 29.7% 2.9%
McDonald's (NYSE: MCD  ) 28.9% 2.8%
Walgreen (NYSE: WAG  ) 21.9% 2.6%
Target (NYSE: TGT  ) 20.1% 2.5%
AFLAC (NYSE: AFL  ) 19.7% 3.2%
W.W. Grainger (NYSE: GWW  ) 17.7% 1.9%
Wal-Mart (NYSE: WMT  ) 15.6% 2.9%
Automatic Data Processing (Nasdaq: ADP  ) 14.9% 3%
Clorox (NYSE: CLX  ) 14.4% 3.5%
Becton, Dickinson (NYSE: BDX  ) 14.2% 2%
PepsiCo (NYSE: PEP  ) 12.6% 3.3%
VF Corp (NYSE: VFC  ) 12.2% 2.3%
Ecolab (NYSE: ECL  ) 11.9% 1.5%
Hormel Foods (NYSE: HRL  ) 11.5% 1.8%
Procter & Gamble (NYSE: PG  ) 11.4% 3.4%
Sigma-Aldrich (Nasdaq: SIAL  ) 11.2% 1.1%
Archer-Daniels-Midland (NYSE: ADM  ) 10.9% 2.3%
Family Dollar Stores (NYSE: FDO  ) 10.9% 1.5%
Leggett & Platt (NYSE: LEG  ) 10.7% 5.6%
Chubb (NYSE: CB  ) 10.3% 2.6%
Air Products & Chemicals (NYSE: APD  ) 10.1% 2.8%
Dover (NYSE: DOV  ) 10.1% 2.3%
Abbott Laboratories (NYSE: ABT  ) 10% 3.9%
Johnson & Johnson (NYSE: JNJ  ) 9.9% 3.6%

Source: Capital IQ, a division of Standard & Poor's.

These aren't formal recommendations -- just ideas for your own further research. Still, they could give you a great start toward find companies capable of paying rising dividends for a quarter-century or more. You can find the list of highest yields here.

Get the best dividend stocks you can find. Read the Fool's special report, "13 High-Yielding Stocks to Buy Today." It's free.

Jim Royal, Ph.D., owns shares of P&G, J&J, and McDonald's. The Motley Fool owns shares of Clorox, PepsiCo, Abbott, AFLAC, Johnson & Johnson, and Wal-Mart. Motley Fool newsletter services have recommended buying shares of Becton, Clorox, Abbott, Procter & Gamble, McDonald's, ADP, Lowe's, AFLAC, J&J, Wal-Mart, and PepsiCo; creating diagonal call positions in Wal-Mart, J&J, and PepsiCo; and writing covered calls on Lowe's. 

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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