Successful investing doesn't have to be complicated. It can be as simple as identifying long-term trends and investing in great businesses that could benefit from them.
Let's dig into three proven dividend growers with clear trends on their side that investors should consider for their portfolios.
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1. Procter & Gamble: The lengthiest dividend growth streak in its sector
Procter & Gamble (PG +0.98%) is the largest consumer goods company on the planet. This is all thanks to a portfolio of world-class brands, such as Tide and Gain laundry detergents, Dawn dish soap, and Swiffer cleaning products. With dozens of well-known brands dominating massive markets like laundry detergent, the company believes an astonishing 5 billion consumers use its products regularly.
NYSE: PG
Key Data Points
Combining significant market share with regular consumption of its products has been a winning formula for P&G for a very long time. That explains how the company just announced earlier this month what will be its 67th consecutive year of dividend growth -- the longest dividend growth streak in the consumer staples sector.
P&G's payout should also have little difficulty growing in the years ahead. That is because the company's dividend payout ratio is just 63% for the current fiscal year ending in June. Steady global population growth and bolt-on acquisitions are expected to lead to 5.4% annual earnings growth over the next five years, fueling future dividend growth.
Income investors will appreciate that P&G's 2.4% dividend yield is meaningfully above the S&P 500 index's 1.7% yield. And the stock is currently trading at a forward price-to-earnings (P/E) ratio of 26. For context, that's below the household and personal products forward P/E ratio of 29.8. P&G is an above-average business trading at a below-average valuation, making it a compelling buy for dividend investors.
2. Albemarle: Lithium demand is going to skyrocket
There's arguably no mineral more pivotal to the future of the world than lithium. Chances are the device you're reading this article on has a lithium-ion battery. No company will likely benefit more from this than Albemarle (ALB +2.67%). With over 7,000 employees in 70 countries, the company is the world's largest lithium producer.
NYSE: ALB
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As more people globally enter the middle class, demand for products using lithium as an input, like consumer electronics and electric vehicles, will soar. That's why market research company Research and Markets anticipates the global lithium market will expand by 12% annually, from $7.5 billion in 2022 to $19 billion by 2030. This should propel Albemarle's profits higher in the years ahead and support the company's 28-year dividend growth streak moving forward.
Albemarle's 0.8% dividend yield won't impress income investors, but that's fine, considering this is more of a growth stock than an income stock, in my opinion. Investors can buy Albemarle at a lowly forward P/E ratio of 9. That's well below the specialty chemicals industry average forward P/E ratio of 16.3, making the stock a compelling buy for the long haul.
3. Air Products & Chemicals: Products that are vital to the world
Producing and selling industrial gases like oxygen, nitrogen, and hydrogen in 50 countries, Air Products & Chemicals (APD +0.49%) is one of the largest industrial gas companies on the planet. Industrial gases are essential inputs across a variety of industries, such as manufacturing, healthcare, and food and beverage.
NYSE: APD
Key Data Points
As the demand for these industries inevitably grows, so will the need for industrial gases. The market research company Grand View Research forecasts that the global industrial gases market will grow 7.4% each year, from $105.1 billion in 2023 to $173.4 billion in 2030. That's why analysts believe Air Products' earnings will rise by 8.8% annually over the next five years.
Coupled with a dividend payout ratio that will come in around 60% in 2023, this should help the company extend its 40-year dividend growth streak in the future. Dividend growth investors can scoop up Air Products' 2.4% dividend yield at a forward P/E ratio of 28.4. This is considerably higher than the specialty chemicals industry average forward P/E ratio of 16.3, but the company's solid growth prospects can justify the premium valuation.
