5 Top Stocks Growing Their Dividends Well Above Inflation

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

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 significantly above the rate of inflation in the last year:


1-Year Dividend Growth Rate

Pfizer (NYSE: PFE  )


Clorox (NYSE: CLX  )


Boeing (NYSE: BA  )


Brookfield Asset Management (NYSE: BAM  )


Johnson Controls (NYSE: JCI  )


Source: S&P Capital IQ

Biopharmaceutical company Pfizer discovers, develops, manufactures, and sells medicines for people and animals worldwide. Pfizer's portfolio of patented drugs produces very healthy cash flows, which the company passes on to shareholders in the form of a solid 3.4% yield. CAPS participants no doubt appreciate this, and have given Pfizer a four-star rating.

Clorox manufactures a wide collection of consumer and professional products. Some of its major brands include Clorox bleach; Liquid-Plumr, Pine-Sol, and Tilex cleaners; Glad plastic wraps; Fresh Step cat litter products; Brita water-filtration systems; Kingsford charcoal products; Hidden Valley dressings; and Burt's Bees natural personal care products. These diversified revenue streams have helped Clorox pay a 3.4% dividend, and earn a four-star rating in CAPS.

Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space, and security systems. Boeing also excels at turning its massive order backlog of nearly 4,800 airplanes worth more than $300 billion into a growing dividend stream for its investors. Boeing has a three-star ranking on CAPS, and is currently yielding 1.8%.

Brookfield Asset Management invests in the property, power, and infrastructure sectors. It owns and manages office properties, develops master planned residential communities, operates hydroelectric power facilities, and develops wind power, among other investments. This Fool favorite has a top five-star CAPS rating, and offers investors a 1.7% dividend.

Johnson Controls is a leading provider of equipment, controls, and services for HVAC, refrigeration, and security systems. It's also a global leader in automotive seating, overhead systems, instrument panels, and interior electronics, as well as lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles. CAPS participants have awarded Johnson Controls with a four-star rating, and the company is paying out a growing 1.8% dividend. Income-seeking investors may also appreciate that Johnson Controls has paid consecutive dividends to its investors since 1887.

The Foolish Bottom Line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 7.1% to 9.5%. And, importantly, all of these companies grew their payout much faster than the rate of U.S. inflation during that time, thereby protecting (and growing) your purchasing power. 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.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

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.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2637614, ~/Articles/ArticleHandler.aspx, 9/24/2016 8:40:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 23 hours ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:02 PM
BA $131.78 Down -0.09 -0.07%
Boeing CAPS Rating: ****
BAM $34.93 Down -0.18 -0.51%
Brookfield Asset M… CAPS Rating: ****
CLX $126.53 Down -0.04 -0.03%
The Clorox Company CAPS Rating: ****
JCI $44.39 Down -0.57 -1.27%
Johnson Controls CAPS Rating: *****
PFE $34.26 Up +0.11 +0.32%
Pfizer CAPS Rating: ****