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

State Street (NYSE: STT  )

19%

Lockheed Martin (NYSE: LMT  )

18.7%

Cintas (NASDAQ: CTAS  )

18.5%

Textainer (NYSE: TGH  )

18.2%

Xilinx (NASDAQ: XLNX  )

15.2%

Source: S&P Capital IQ.

State Street is a financial holding company which provides a range of investment management services such as deposit taking, record keeping, operations outsourcing, foreign exchange, and trading services, as well as performance, risk, and compliance analytics for corporations, mutual funds, endowments, and other institutional investors . State Street currently has a three-star ranking on CAPS and offers investors a 1.5% yield.

Lockheed Martin is a security and aerospace company that engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products for defense, civil, and commercial applications in the United States and internationally. Lockheed Martin has a three-star rating in CAPS and is yielding 3.7%.

Cintas provides corporate identity uniforms and related business services for approximately 1 million businesses worldwide. These services include carpet, tile, and restroom cleaning; first aid, safety, and fire protection; and document management. Fools have given Cintas a top five-star rating in CAPS and its stock is yielding a growing 1.3%.

Textainer is the world's largest cargo container leasing company with a total of nearly 2 million containers in its owned and managed fleet. Textainer leases standard dry freight, dry freight specials, and refrigerated intermodal containers to more than 400 shipping lines via a worldwide network of more than 150 offices and depots . This Fool favorite has a top five-star CAPS rating and offers investors a hefty 5.3% dividend.

Xilinx designs and develops programmable logic solutions including advanced integrated circuits and software design tools, and offers customer training, field engineering, and technical support. CAPS participants have given Xilinx a three-star rating, and the company is paying out a 2.2% dividend.

The Foolish Bottom Line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 15% to 19%. 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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