Dividends are nice. But they're particularly great when they increase every year at meaningful rates. Two companies doing this are business software company Oracle (ORCL -1.20%) and discount retailer Dollar General (DG 0.72%). In fact, both of these companies announced increases to their quarterly dividends just this week.

Here's a look at these two dividend stocks' latest increases, as well as their potential for further dividend growth in the coming years.

A chalkboard sketch of a bar chart showing a growth trend.

Image source: Getty Images.


On Thursday, March 14, Oracle said its board approved a quarterly dividend of $0.24, up an impressive 26% compared to its previous quarterly dividend of $0.19. The dividend, Oracle said, will be paid to stockholders of record as of the close of business on April 11, with a payment date of April 25. 

In light of this dividend increase, Oracle now has a forward dividend yield of 1.8%.

This extends Oracle's long history of dividend increases. The company's quarterly dividend has doubled over the last five years, making Oracle a solid dividend growth stock.

But can its dividend growth continue? Probably, as the company is currently only paying out about 22% of its annual free cash flow in dividends.

Oracle's underlying business also appears to be in good enough shape to keep supporting dividend growth. Consider the company's just-announced fiscal third-quarter results, which saw revenue rise 3% in constant currency and non-GAAP EPS rise 8% year over year.

Check out the latest earnings call transcripts for Oracle and Dollar General.

Dollar General

Discount retailer Dollar General announced a 10% increase to its quarterly dividend on the same day that Oracle announced its dividend increase. This puts Dollar General's quarterly dividend at $0.32, giving the stock a 1.3% forward dividend yield.

The dividend will be payable on or before April 23 to shareholders of record as of close of business on April 9, the company said.

Dollar General's dividend growth hasn't been as impressive as Oracle's. Since 2015, the company's quarterly dividend has increased from $0.22 to $0.32, compounding at an average rate of just below 10%. But, like Oracle, Dollar General has significant room for further dividend increases. Annual dividend payments currently amount to just 21% of trailing-12-month free cash flow.

More importantly, Dollar General's business is growing nicely. Fourth-quarter net sales were up 8.5% year over year and sales for its just-ended fiscal 2018 increased 9.2% year over year. In addition, the company's fourth-quarter earnings per share climbed 24.3% year over year when excluding a $311 million benefit to net income for the remeasurement of deferred tax assets and liabilities in the fourth quarter of fiscal 2017.

Both of these stocks may have fairly small dividend yields, but there's a good chance they will each continue to increase their dividends at meaningful rates in the years to come.