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 midcap, 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

Huntsman (NYSE: HUN  )

18.8%

Microsoft (NASDAQ: MSFT  )

16.9%

Kinder Morgan (NYSE: KMI  )

16.4%

ExxonMobil (NYSE: XOM  )

15.4%

Lockheed Martin (NYSE: LMT  )

15%

Source: S&P Capital IQ.

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 2.2%.

Love it or hate it, Microsoft is a powerful force in the world of technology. Its ubiquitous Windows software is still the market leader by a wide margin when it comes to PC operating systems, and its Office software remains a key productivity application for many businesses around the world. Fools have given Microsoft a three-star rating in CAPS, and its stock is paying a growing 3% dividend.

Kinder Morgan is the largest midstream energy company in North America, with approximately 80,000 miles of pipelines that transport natural gas, refined petroleum products, crude oil, carbon dioxide, and other products. Most of Kinder Morgan's businesses are able to avoid commodity price risk by operating like a giant toll roads that receive a fee for their transportation services. That consistent cash flow is then passed on to shareholders in the form of a 4.7% dividend, helping Kinder Morgan earn a top tier five-star rating in CAPS.

ExxonMobil is one of the largest integrated oil and gas companies in the world. It explores, produces, transports, and sells crude oil and natural gas. It also manufactures and markets commodity petrochemicals. ExxonMobil currently has a four-star ranking on CAPS and offers investors a 2.7% yield.

Lockheed Martin is a global security and aerospace company that engages in the design, manufacture, integration, and sustainment of advanced technology systems for defense, civil, and commercial applications. Lockheed Martin has a three-star rating in CAPS and is yielding 3.9%.

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