5 Stocks Growing Their Dividends by More Than 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 more than 10% over the past year.

Company

1-Year Dividend Growth Rate

Ecolab (NYSE: ECL  )

14.8%

Fastenal (NASDAQ: FAST  )

14.8%

CSX (NYSE: CSX  )

14%

Huntsman (NYSE: HUN  )

12.5%

Teck Resources (NYSE: TCK  )

12.5%

Source: S&P Capital IQ.

Ecolab provides cleaning and related products and services to the hospitality, food-service, health-care, and industrial markets. CAPS participants have awarded Ecolab with a top five-star rating, and the company is paying out a growing 1% dividend.

Fastenal operates as a wholesaler and retailer of industrial and construction supplies. Its product lineup includes fastener products such as bolts, nuts, screws, studs, and related washers; and miscellaneous supplies and hardware consisting of various pins and machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. Fastenal currently has a four-star ranking on CAPS and offers investors a 2.2% yield.

CSX provides rail, intermodal, and rail-to-truck services that together help to make it one of the leading transportation companies in the United States. Fools appreciate the wide competitive moat surrounding CSX's rail network -- as well as its rising 2.4% dividend -- and have given it a top five-star rating in CAPS.

Huntsman is a global manufacturer of organic and inorganic chemical products including polyurethane chemicals, epoxy resin compounds and formulations, textile chemicals and dyes, and titanium dioxide. Huntsman sports a four-star rating in CAPS and is yielding 2.8%.

Teck Resources engages in the exploration, acquisition, and production of natural resources, including copper, steelmaking coal, gold, silver, and specialty metals. In addition, it holds ownership interests in oil sands projects in the Athabasca region of Alberta. Teck Resources has a four-star CAPS rating and offers investors a 3.4% dividend.

The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 12% to nearly 15%. 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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