5 Stocks Growing Their Dividends by 30% 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 30% or more over the last year:

Company

1-Year Dividend Growth Rate

Polaris Industries (NYSE: PII  )

32.8%

Williams Companies (NYSE: WMB  )

31.7%

Legg Mason (NYSE: LM  )

31.4%

AmTrust Financial Services (NASDAQ: AFSI  )

30.8%

Yamana Gold (NYSE: AUY  )

30%

Source: S&P Capital IQ

Polaris Industries designs, manufactures, and markets high-performance motorized products including all-terrain recreational and utility off-road vehicles, such as ATVs and side-by-sides; snowmobiles; on-road vehicles, including motorcycles and small vehicles; and related parts, garments, and accessories. Polaris Industries currently has a four-star ranking on CAPS and offers investors a 1.4% yield.

Williams is an energy infrastructure company that owns and operates midstream gathering and processing assets, and interstate natural gas pipelines. In addition, Williams processes oil sands off-gas and produces olefins for petrochemical feedstocks . Fools have given Williams a three-star rating in CAPS, and its stock is yielding 4.1%.

Legg Mason is a diversified group of global asset management firms that provide clients with a broad spectrum of equity, fixed income, liquidity, and alternatives solutions, including mutual funds, college savings plans, variable annuities, and separately managed accounts. Legg Mason has a three-star rating in CAPS and is yielding 1.5%.

AmTrust Financial Services is a multinational property and casualty insurer specializing in coverage for small- to mid-sized businesses, offering a portfolio of insurance products including multiline small business insurance, program business insurance, and extended warranty and specialty risk insurance. This Fool favorite has a top five-star CAPS rating and offers investors a growing 1.4% dividend.

Yamana Gold is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties, and land positions throughout the Americas including Brazil, Argentina, Chile, and Mexico. CAPS participants have given Yamana a three-star rating, and the company is paying out a 2.5% dividend.

The Foolish Bottom Line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 30% to nearly 33%. 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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