What's the Difference Between the Dow's 3 Fastest Dividend Growers?

UnitedHealth, Visa, and McDonald's provide the fastest five-year dividend growth on the Dow today. But these three stocks fit very different investor strategies.

Jan 7, 2014 at 2:00PM

Dividend-paying stocks tend to beat the market in the long run. The Dow Jones Industrial Average (DJINDICES:^DJI) is packed with 30 dividend payers, hand-picked for their staying power. The cream of the dividend-paying crop among these 30 elite stocks should provide a fantastic income-generating foundation for any long-term investing portfolio, including yours. But how do you find the best of the best?

One way is to rank the Dow components by dividend growth. By that measure, here are the top three Dow stocks over the last five years:


5-Year Compound Average Dividend Growth (CAGR)

CAPS Rating

UnitedHealth Group (NYSE:UNH)



Visa (NYSE:V)



McDonald's (NYSE:MCD)



Data from S&P CapitalIQ.

On average, UnitedHealth has more than doubled its dividend every year over the last half-decade. Visa's 46% annual growth rate and McDonald's' 22% CAGR look downright timid next to the health insurance giant's massive dividend strides.

But it ain't that simple, dear Fool. You see, Visa and McDonald's built their dividend growth one step at a time, raising their payouts like clockwork every year. UnitedHealth started its five-year payout growth story with a bang, raising its nominal $0.03 dividend per share in 2009 to $0.41 in 2010. When you start out with a more than tenfold increase, you're kind of skewing the whole five-year story.

This is what the top three payout growth stories look like in a five-year perspective:

UNH Dividend Chart

UNH Dividend data by YCharts.

UnitedHealth has followed that initial surge with growth rates consistently north of 30%. Visa has delivered 40% annual dividend increases or better three times in the last five years, while McDonald's never crossed the 30% threshold.

So UnitedHealth is still one of the Dow's strongest dividend growers, with or without that 2010 leap. Just don't expect another sudden 1,250% surge like the one we saw that year, because that was a one-time event based on UnitedHealth finally taking dividend payouts seriously.

And while UnitedHealth stock may have shot past Visa's timid dividend yields, it still runs far behind McDonald's in the current income-generating perspective.

UNH Dividend Yield (TTM) Chart

UNH Dividend Yield (TTM) data by YCharts.

One size most definitely doesn't fit all. If you're looking for big payouts now, McDonald's might fit your portfolio better than either of its high dividend-growth peers. For investors with a long-term view, McDonald's might actually be the worst of these three choices due to its slower payout growth.

9 more rock-solid dividend tips
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Fool contributor Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends McDonald's, UnitedHealth Group, and Visa. The Motley Fool owns shares of McDonald's and Visa. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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