If dividend investing is the slow and steady path to wealth, than dividend growth is the engine providing the power. In order for the process to work correctly, investors must choose companies that consistently raise their dividends faster than inflation.
Historically, we can assume inflation will average, over the long term, somewhere between 3 - 4%. Finding companies that grow their dividends well above this benchmark is one of the most important aspects of dividend investing.
The following companies have not just grown their dividends consistently, but have done so at an above average rate of over 20% compounded over the years. Anyone who purchased these companies at a fair price over the past decade has seen their yield on cost rise to well above the yield on Treasurys, while also banking some capital gains.
*Note: For those companies without 10 years of dividend increases, the 5 year CAGR was used.
CenturyLink (NYSE:CTL) is an integrated communications company engaged primarily in providing a range of communications services, including local and long distance voice, wholesale local network access, high-speed Internet access, other data services and video services.
- Dividend 10 year CAGR - 34.7%
- Current Yield - 7%
- Current Price - $41.03
Aflac (NYSE:AFL) principal business is supplemental health and life insurance, through its subsidiary, American Family Life Assurance Company of Columbus (Aflac), which operates in the United States (Aflac U.S.) and as a branch in Japan (Aflac Japan).
- Dividend 10 year CAGR - 21.8%
- Current Yield - 2.24%
- Current Price - $53.50
Lowes (NYSE:LOW) is a home improvement retailer. As of January 29, 2010, the Company operated 1,710 stores, consisted of 1,694 stores across 50 United States states and 16 stores in Canada.
- Dividend 5 year CAGR - 25.7%
- Current Yield - 1.65%
- Current Price - $26.74
Yum! Brands (NYSE:YUM) is the worlds largest quick service restaurant company, with more than 37,000 units in more than 110 countries and territories. Yum sells food through its five concepts of KFC, Pizza Hut, Taco Bell, Long John Silver’s (LJS) and A&W All-American Food Restaurants (A&W)
- Dividend 5 year CAGR - 20.9%
- Current Yield - 1.96%
- Current Price - $51.40
McDonalds (NYSE:MCD) franchises and operates McDonald’s restaurants in the global restaurant industry.
- Dividend 10 year CAGR - 28.6%
- Current Yield - 3.2%
- Current Price - $75.99
Cardinal Health (NYSE:CAH) is a global healthcare solutions company providing products and services to hospitals, physician offices and pharmacies. The Company operates in two segments: Pharmaceutical and Medical.
- Dividend 10 year CAGR - 25.7%
- Current Yield - 1.85%
- Current Price - $42.21
TJX Companies Inc. (NYSE:TJX) is an off-price apparel and home fashions retailer, under the brands Marshalls and TJ Maxx. The company has operations in the US, Canada, and Europe.
- Dividend 10 year CAGR - 20.2%
- Current Yield - 1.21%
- Current Price - $49.50
Stryke Corp (NYSE:SYK) is a medical technology company. The Company provides orthopaedic implants, as well as medical and surgical equipment. It has two segments: Orthopaedic Implants and MedSurg Equipment.
- Dividend 10 year CAGR - 34.7%
- Current Yield - 1.18%
- Current Price - $60.90
Disclosure: I am long MCD.