5 Stocks Growing Their Dividends by 25% 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 25% or more over the past year.

Company

1-Year Dividend Growth Rate

Qualcomm (NASDAQ: QCOM  )

29%

Marathon Petroleum (NYSE: MPC  )

28.3%

Valero Energy (NYSE: VLO  )

28%

Weyerhaeuser (NYSE: WY  )

26.7%

Oracle (NYSE: ORCL  )

25%

Source: S&P Capital IQ.

Qualcomm designs, develops, manufactures, and markets digital telecommunications products and services. With a treasure trove of wireless patents and massive scale, Qualcomm is well positioned to profit from the surging global growth of mobile devices. CAPS participants have taken notice and have awarded Qualcomm with the highest five-star rating. Its shares are yielding 2.1%.

Marathon Petroleum refines, transports, and markets petroleum products. The company owns and operates seven refineries in the Gulf Coast and Midwest regions of the U.S., as well as a network of more than 5,000 Marathon and approximately 1,470 Speedway gas stations. Fools have given Marathon a five-star rating in CAPS, and the company is paying out a 2.3% dividend.

Valero Energy is an international manufacturer and marketer of transportation fuels, other petrochemical products, and power, with assets that include 16 petroleum refineries, 10 ethanol plants, and a 50-megawatt wind farm. Valero has a top tier five-star rating in CAPS, and its stock is yielding 2.2%.

Weyerhaeuser, as an integrated forest products company, grows and harvests trees, builds homes, and makes wood and paper products. Its 6.4 million acres of private commercial forestland almost literally grow money on trees, which Weyerhaeuser passes on to its shareholders via its 3% dividend. Its stock has a four-star CAPS rating.

Oracle develops, manufactures, markets, hosts, and supports database and middleware software, applications software, and hardware systems. The tech giant has earned a four-star rating in CAPS and offers investors a growing 1.4% dividend.

The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 25% to 29%. 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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  • Report this Comment On November 10, 2013, at 1:32 AM, RyanPeckyno wrote:

    What about 30%? Are there 5 decent stocks that are growing their dividends at 30%?

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