Dividend-paying stocks are wildly popular right now, and for good reason: Yields elsewhere are paltry. I'm a particular fan of companies that have shown a commitment to increasing their dividends -- Ned Davis Research showed that from 1972 to 2010, S&P 500 companies that raised their dividends thrashed the returns of companies that eliminated, cut, or didn't pay a dividend at all.
Given that, I set out to find the S&P 500 stocks that have been the most aggressive dividend-raisers over the past 10 years. Currently, about 400 of the stocks in that index pay a dividend, but only five have increased their dividend payouts by more than 50% per year over the past decade:
|
Company |
Current Yield |
10-Year Return |
10-Year Dividend CAGR |
|---|---|---|---|
|
Waste Management |
3.9% |
6.7% |
63.1% |
|
UnitedHealth |
1.2% |
11.3% |
55.3% |
|
AmerisourceBergen |
1.3% |
10.2% |
53.6% |
|
Aetna |
1.5% |
18.6% |
51.2% |
|
Fastenal |
1.4% |
19.8% |
50.0% |
Dividend growth data from S&P Capital IQ; returns data from Yahoo! Finance. CAGR = compound annual growth rate.
A few takeaways
Three of the five stocks here operate in the health-care industry: Aetna, UnitedHealth, and AmerisourceBergen. Waste Management and Fastenal are market leaders in their own sleepy industries.
Their overall performance confirms (on a smaller scale) the Ned Davis Research study mentioned above. The broader S&P 500 index returned 3.9% per year over the time frame tracked here, meaning all of these stocks handily outperformed the index.
Yet, these current yields aren't all that impressive. With the exception of Waste Management, all have yields below that of the broader S&P index.
That the payouts have been raised so aggressively while the trailing yield is so small shows how tiny these payouts were 10 years ago. For example, UnitedHealth Group paid out a $0.03 per-year dividend until 2010, when it increased both the size and frequency of that dividend. It's now paying $0.1625 every quarter.
The dividend growth rates of these five stocks are incredible. For current investors, though it's unlikely you'll get 50%-plus annualized rates, keep an eye on these stocks to see if they continue to increase their payments -- and maybe one day join the elite Dividend Aristocrats, companies that have raised payments for 25 consecutive years.
Looking for more dividend ideas? I encourage you to check out this free report, which gives the buy thesis for 11 high-yielding dividend stocks. Click here for your copy.
