5 Stocks Growing Their Dividends by 15% 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 15% or more over the past year.

Company

1-Year Dividend Growth Rate

Trinity Industries (NYSE: TRN  )

21.1%

Dow Chemical (NYSE: DOW  )

19.6%

Western Gas Partners (NYSE: WES  )

17.8%

National Instruments (NASDAQ: NATI  )

16.7%

Weyerhaeuser (NYSE: WY  )

15%

Source: S&P Capital IQ.

Trinity Industries provides products and services to the industrial, energy, transportation, and construction sectors, with a diversified array of products including railcars, inland barges, highway guardrails, concrete and aggregates, and wind towers. Trinity Industries currently has a top five-star ranking on CAPS and offers investors a growing 1.2% yield.

Dow Chemical manufactures innovative chemical, plastic, and agricultural products to customers in 160 countries, helping them to address challenging problems such as the need for clean water, renewable energy generation and conservation, and increasing agricultural productivity. Dow Chemical currently sports a four-star rating in CAPS and is yielding 3.4%.

Western Gas Partners owns, operates, acquires, and develops midstream energy assets in Texas and the Rocky Mountain region. This MLP engages in gathering, compressing, processing, treating, and transporting natural gas, condensate, natural gas liquids, and crude oil, and passes on its cash flow to unit holders in the form of a 3.7% dividend. Fools have given Western Gas Partners a five-star rating in CAPS.

National Instruments designs, manufactures, and sells measurement and automation tools to engineers and scientists worldwide. CAPS participants have awarded National Instruments with a five-star rating, and the company is paying out a growing 2% dividend yield.

Weyerhaeuser, as an integrated forest products company, grows and harvests trees, builds homes, and makes wood and paper products. Its 6.4 million acres of private commercial forestland almost literally grows money on trees, which Weyerhaeuser passes on to its shareholders via its 3.2% dividend. Its stock has a four-star CAPS rating.

The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 15% to 21%. 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 The Motley Fool's 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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