There are a handful of reasons to love dividend stocks. But one of the best reasons is because most dividend stocks actually have growing dividends. In fact, many companies increase their dividends on an annual basis. But dividend stocks get really exciting when they're growing at double-digit rates.

Of course, investors need to ensure they're buying quality companies with underlying earnings growth when they're betting on dividend appreciation over the long haul. Without strong financials and earnings growth, it's difficult for companies to sustain their dividend growth. Below are two top-notch companies whose dividends look poised to double in about five years: Home Depot (NYSE:HD) and Starbucks (NASDAQ:SBUX).

Lumber in a Home Depot store

Image source: Home Depot.


Annualized Dividend Growth (5-Year Average)

Annualized EPS Growth (5-Year Average)

Payout Ratio

Most Recent Dividend Increase

Home Depot










Data source: Reuters and company press releases. Table by author.

Home Depot

Home improvement retailer Home Depot has been on a tear recently. Indeed, Home Depot's dividend and earnings per share (EPS) both soared 50% or more over the past three years. Further, over the past five years, Home Depot's dividend and EPS have risen at an average annual rate of 25% and 21%, respectively.

This strong momentum, combined with Home Depot's conservative payout ratio of 46%, easily position Home Depot for more strong dividend growth in the coming years. Indeed, even if Home Depot's average dividend growth decelerated to 15% -- well below its 5-year average annualized growth, and below its most recent dividend increase of 16% -- Home Depot's dividend would double in about five years.


Starbucks has clearly prioritized its dividend growth recently, with its dividend rising faster than earnings over the last three years. Backed by a $15 billion authorization to return capital to shareholders through dividends and buybacks over the next three years, Starbucks CEO Kevin Johnson has been adamant about the company's strong commitment to returning cash to shareholders.

"I want to make clear that our commitment to our long-term growth targets and strategy, including our commitment to returning $15 billion to shareholders under the next three years in the form of dividends and buybacks, is unwavering," said Johnson during Starbucks' first-quarter conference call for fiscal 2018. 

Considering Starbucks' commitment to returning capital to shareholders, its five-year average annualized dividend growth, and its most recent dividend increase of 20%, there's a good chance Starbucks' dividend could double in as little as five years. Indeed, if Starbucks' average annualized dividend growth held at about 19%, the coffee giant could double its dividend in just four years. 

What's particularly attractive about these two dividend stocks is that not only are their dividends growing rapidly, but they both have meaningful dividend yields at today's prices. So, investors who buy Home Depot and Starbucks get both meaningful income streams today and strong dividend growth. Home Depot and Starbucks both have dividend yields of 2.1% at the time of this writing.