5 Stocks Growing Their Dividends By 10% 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?

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 10% or more over the last year:

Source: S&P Capital IQ

Brookfield Infrastructure Partners owns and operates electricity transmission systems, infrastructure assets, and timberlands. Infrastructure assets enjoy high barriers to entry and consistent long-term cash flows, which Brookfield passes on to its investors in the form of an attractive 5% yield. CAPS participants have taken notice, and have awarded Brookfield Infrastructure Partners with the highest five-star rating.

International Paper is a paper and packaging company with an array of products that includes containerboards, printing and writing papers, towel and tissue products, cups and plates, and filtration products, among others. It also distributes paper products to commercial printers, facility managers, and manufacturers, along with offering warehousing and delivery services. International Paper currently has a four-star ranking on CAPS, and offers investors a 2.5% yield.

Broadcom provides semiconductor solutions for wired and wireless communications. It products enable the delivery of voice, video, data, and multimedia to and throughout the home, the office, and the mobile environment. Broadcom's mission is "to connect everything," and the company estimates that 99.98% of Internet traffic crosses at least one Broadcom chip. Fools appreciate Broadcom's strong competitive position in the connected world -- along with its growing 1.7% dividend -- and have given the innovative company a four-star rating in CAPS.

Honeywell is a diversified technology and manufacturing company, serving customers worldwide with aerospace products and services, environmental and sensing controls, and security technologies for homes, buildings, and industrial facilities. Honeywell currently sports a five-star rating in CAPS, and is yielding 2%.

Part semiconductor chip maker and part technology incubator, Cypress Semiconductor is a leader in programmable system-on-a-chip solutions, touch sensing technology, USB controllers, and SRAM and RAM memory. With Fool favorite T. J. Rodgers at the helm, along with a rising 3.8% dividend, CAPS players like the four-star rated Cypress Semiconductor's odds of success.

The Foolish Bottom Line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases of more than 10%. 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.