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.
|
Company |
5-Year Average Annual Dividend Growth Rate |
Yield |
|---|---|---|
|
CenturyLink |
63.9% | 8.4% |
|
Lowe's |
29.7% | 2.9% |
|
McDonald's |
28.9% | 2.8% |
|
Walgreen |
21.9% | 2.6% |
|
Target |
20.1% | 2.5% |
|
AFLAC |
19.7% | 3.2% |
|
W.W. Grainger |
17.7% | 1.9% |
|
Wal-Mart |
15.6% | 2.9% |
|
Automatic Data Processing |
14.9% | 3% |
|
Clorox |
14.4% | 3.5% |
|
Becton, Dickinson |
14.2% | 2% |
|
PepsiCo |
12.6% | 3.3% |
|
VF Corp |
12.2% | 2.3% |
|
Ecolab |
11.9% | 1.5% |
|
Hormel Foods |
11.5% | 1.8% |
|
Procter & Gamble |
11.4% | 3.4% |
|
Sigma-Aldrich |
11.2% | 1.1% |
|
Archer-Daniels-Midland |
10.9% | 2.3% |
|
Family Dollar Stores |
10.9% | 1.5% |
|
Leggett & Platt |
10.7% | 5.6% |
|
Chubb |
10.3% | 2.6% |
|
Air Products & Chemicals |
10.1% | 2.8% |
|
Dover |
10.1% | 2.3% |
|
Abbott Laboratories |
10% | 3.9% |
|
Johnson & Johnson |
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.
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