Fashion can be a fickle and volatile business, but it can also be particularly profitable for investors in companies that know how to consistently deliver the right merchandise to their customers while generating growing cash flows for shareholders. TJX (TJX 0.45%), Gap (GPS 0.77%), and VF Corporation (VFC 1.25%) are three well-run companies in the fashion and apparel business with healthy dividend growth prospects.

Low prices and high dividend growth from TJX
TJX operates more than 3,200 apparel and home fashion discount stores in the U.S., Canada, and Europe under different brand names like T.J.Maxx, Marshalls, and HomeGoods, among others. The company is the largest off-price retailer in the world, and its scale and global reach provide a position of strength when negotiating with suppliers.

TJX purchases inventory from department stores under favorable conditions. This allows the company to obtain conveniently low prices, which it translates into pricing discounts in the range of 20% to 60% below regular prices.

This business model has been remarkably fruitful for the company from a financial point of view: TJX has reported growing comparable-store sales in each of the last 17 consecutive years, an enviable track record of resiliency in such a competitive and cyclical industry.

Management believes it can ultimately expand its store base to 5,150 units in the long term, considering only current chains and current markets. TJX has plenty of room for growth, especially because new openings are not cannibalizing sales at existing locations.

TJX pays a modest dividend yield of 0.9%, but dividend growth has been quite impressive. The company has raised payments during the last 17 consecutive years, and the compound annual dividend growth rate was 23% during that period. This includes a big increase of 26% in 2013.

Gap is a consistent performer
Gap operates more than 3,500 stores under its widely recognized brands Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix. The company has a presence in more than 90 countries, and offers affordable prices in basic apparel to a wide audience of customers.

Competition has been increasing from different fronts lately. Mass merchants like Target and Kohl´s are broadening their presence in the basic fashion apparel business, and international player Inditex -- the owner of Zara and other affordable fashion brands -- has expanded rapidly during the past few years.

However, Gap is proving its ability to compete efficiently and continues delivering results for investors under challenging industry conditions. The company announced a solid increase of 1% in comparable-store sales for the holiday season, and management now expects earnings per share to be near the high end of its guidance for fiscal 2013.

The company increased dividends twice during 2013, including a big increase of 60% from $0.6 per year to $0.8 per year, announced in August. Dividend payments have grown almost tenfold since 2004 at this consistent fashion retailer, and Gap yields 2.1% in dividends at current prices.

VF for long-term dividend growth
VF Corporation is a global leader in branded lifestyle footwear and apparel. The company owns more than 30 brands, including notable names like The North Face, Vans, Wrangler, Timberland, and Lee, among others. VF has considerable presence in Europe, and its products can be found in nearly 1,400 stores across Asia.

This diversity of brands and strong global presence provide diversification and stability for the company, and VF has a truly exceptional track record of dividend growth. The company has raised dividend payments during the last 41 consecutive years, and it has returned nearly $5 billion to shareholders via dividends and share buybacks over the last decade.

This long-term track record of growing dividends is unique for a company in the footwear and apparel business, and a strong reflection of financial soundness and competitive strength. Besides, dividend growth seems to be far from over considering that the company announced a big increase of 21% in distributions for 2013. The stock has a dividend yield of 1.7%.

Bottom line
TJX, Gap, and VF Corporation stand out among other fashion and apparel companies because of their sound dividend trajectories, and healthy dividend growth prospects. It takes a well-managed business with strong competitive advantages to generate consistently growing cash flow over the years, and that can be a powerful driver of superior returns for investors.