5 Stocks That Doubled Their Dividends in the Past 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?

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 100% or more over the past year:

Company

1-Year Dividend Growth Rate

Southwest Airlines (NYSE: LUV  )

198%

PotashCorp (NYSE: POT  )

150%

Cisco Systems (NASDAQ: CSCO  )

104%

Discover Financial Services (NYSE: DFS  )

100%

Ford (NYSE: F  )

100%

Source: S&P Capital IQ.

Southwest Airlines is a major U.S. airline that provides point-to-point, low-fare service. Southwest has stayed on top of its troubled industry for years, thanks to smart management and a no-frills business model that's built for profit. It currently has a three-star ranking on CAPS and offers investors a growing 1.2% yield.

Canadian-based PotashCorp produces and sells potash, which is used as fertilizer, and also offers phosphate and nitrogen fertilizers, animal feed supplements, and other related products. Potash currently sports a four-star rating in CAPS and is yielding 4.5%.

Cisco Systems creates Internet protocol-based routers and switches that move data, voice, and video packets across networks. The company also provides set-top boxes, cable modems, telepresence systems, and security products. Fools have given Coach a four-star rating in CAPS, and its stock is yielding 2.6%.

Discover Financial Services is a bank holding company that provides direct banking and payment services in the United States. Its banking business includes Discover-card branded credit cards, CDs, money market and savings accounts, home loans, personal loans, and student loans. Discover's payment services business consists of: PULSE, one of the nation's leading ATM/debit networks, and Diners Club International, a global payments network. CAPS participants have given Discover a four-star rating, and the company is paying out a 1.6% dividend yield.

From its assembly lines in the early 1900s to the Mustang and the F-Series trucks, Ford is an American car-making icon. Its return to profitability, plan to manage debt, and innovative new vehicles have investors excited about Ford's future. This Fool favorite has a four-star CAPS rating and offers investors a 2.3% dividend.

The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 100% to almost 200%. That level of growth would provide a substantial boost to just about any investor's dividend income. But more important to investors today is to identify the companies that will grow their dividends substantially in the years ahead. If you're interested in hearing about some excellent companies that are likely to boost their dividends from this point forward, I'd like to offer you a brand-new free report from Motley Fool expert analysts called "Secure Your Future With 9 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. To discover the identities of these companies before the rest of the market catches on, you can access this valuable free report by simply clicking here now.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 14, 2013, at 7:10 AM, nosellted wrote:

    You might want to switch the wording from Coach to Cisco. Guess these article are really that interchangeable.

  • Report this Comment On August 18, 2013, at 6:42 AM, MightyMinnow wrote:

    (theory)

    The dividend hike for POT was part of a long term plan to squeeze out the competition. I think they (the cartel) want bhp (for one) to buy into the cartel and get with the program. With buy backs and a growing dividend yield, the established producers (and their stock holders) should be in no hurry for a deal to be struck. If your a re-investor these freshly hiked dividends are getting the maximum bang for the buck.

    Time is on the side of the cartels because of the dividend and the buy backs.

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