Retail is a challenging and competitive industry. However, investors can find outstanding high-quality companies with consistent dividend growth if they know where to look. Macy's (NYSE:M), Lowe's (NYSE:LOW), and Walgreen (NASDAQ:WBA) are three exceptional retailers showing you the money year after year.

Macy's is dressed for success
Most department stores are facing serious difficulties. Lackluster consumer spending and a harshly competitive pricing environment are hurting both sales and profit margins across the industry. However, Macy's is proving its fundamental strength by outperforming most competitors in this challenging context.

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Macy's is focused on providing a differentiated experience for customers via a strategy that management calls MOM: My Macy's localization, Omnichannel integration, and MAGIC selling -- with MAGIC as an acronym for five points that sales associates are expected to meet in their customer interactions.

The company has been a leader in terms of adapting to a changing retail environment, a crucial factor considering the e-commerce boom and other industry trends.

Macy's has built fulfillment centers in all of its stores, which means the company has gained a lot of strength when it comes to logistics and distribution for its direct-to-consumer segment. The company is also rolling out a "buy online, pick up in store" program, and management has described the initial results in the 45 stores where the option is available as "just tremendous."

In May the company announced a 25% increase in dividends, from $0.25 to to $0.3125 per share quarterly. Macy's also increased its share repurchase plan by $1.5 billion, bringing the total remaining authorization to approximately $2.5 billion.

The company has actively raised dividends since 2010, when the quarterly dividend was only $0.05, growing dividends by 525% since then. Macy's pays a dividend yield of 2.1%, and the payout ratio is quite comfortable, at less than 28%, when compared against earnings estimates for this fiscal year.

Lowe's keeps building cash flows over the years
Demand for housing-related products tends to be cyclical and volatile, and many companies in the business were hit particularly hard during the real estate crisis in 2008 and 2009. However, you wouldn't have guessed that by looking at Lowe's and its extraordinary track record of dividend growth over time.

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Lowe's has paid uninterrupted dividends since 1961, and the company has raised payments for 51 consecutive years. Lowe's increased its dividends by 6.25% in 2009, when the economy was going through a really dismal period and the housing market was collapsing.

That Lowe's was able to continue increasing dividends while facing such a tremendously challenging economic scenario speaks wonders about the company's fundamental quality and management's ability to deliver sound results and growing dividends through both good and bad times.

Lowe's announced a 27.8% dividend increase in May, raising the quarterly payment from $0.18 to $0.23 per share. The dividend yield stands at 1.9%, and the payout ratio around 35% of earnings leaves plenty of room for further dividend increases in the years ahead.

Healthy cash flows from Walgreen
With more than 8,600 locations in all 50 states, Walgreen is a leading player in the drugstore industry. Broad geographical coverage represents a key source of competitive strength for the company. Opportunities for differentiation are minimal in the sector, so location is a main deciding factor for consumers, and Walgreen is remarkably well positioned from that point of view.

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The company is benefiting from growing demand resulting from secular industry tailwinds, such as demographic trends, expanding health care insurance coverage, and technical advancements in the health care industry, like new drugs and treatments for different kinds of health problems.

Walgreen announced a big 8.9% sales increase for June, to $6.28 billion, versus $5.77 billion in the same month in 2013. Pharmacy sales increased by 13.4% on the back of an 11.3% increase in comparable-store pharmacy sales. Total sales in comparable stores jumped 7.5% in June, confirming that Walgreen is benefiting from robust demand.

Walgreen has paid uninterrupted dividends over the past 81 years, and the company has raised its payments for 38 years in a row. In July 2013, Walgreen raised its dividend by 14.5%, from $0.275 to 0.315.

Walgreen pays a dividend yield of 1.7%, and the payout ratio is comfortably low in the neighborhood of 37.6% of average earnings estimates for the current fiscal year.

Foolish takeaway
It takes a solid and reliable business to produce the cash flows for consistently growing dividend payments. Macy's, Lowe's, and Walgreen are three companies with remarkable track records of dividend growth, and they are well positioned to continue raising dividends for years to come. This says a lot about these companies and their underlying fundamentals.