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To dividend growth investors, the only thing better than dividend growth is lots of dividend growth. So I am looking for companies that have the intent and ability to grow dividends aggressively. That means cash rich companies, with low payout ratios and large earnings growth. The type of companies that have -- and can continue -- to grow dividends by high double digit rates each year.

Tim Hortons (THI)

What could be more Canadian – or more boring – than Tim Hortons. I fear some U.S. investors may have passed on this stock because of the company’s rather hokey patriotic appeals to Canadian pride. But you can’t argue with results: Tim Hortons is not only Canada’s largest fast food restaurant but has captured an incredible 75% of the coffee and baked goods market share. Its customers are loyal to the brand -- extremely loyal -- almost to the point of being scary.

All this market share and loyalty junk is pretty much the perfect cash generating machine. A five year dividend growth rate of almost 20% has barely dented the free cash flow. This year Tim Hortons rewarded investors with a jaw-dropping 30% dividend increase. And it still had money left over so it has begun a $400 million share repurchase program, which represents over a full 8% of outstanding shares.

I must admit I go to Starbucks for my coffee but in my brokerage account it's Tim Hortons all the way!

Tim Hortons Inc Key Metrics

Dividend Yield

1.4%

1 year Dividend Growth Rate

30.8%

5 year Dividend Growth Rate

19.4%

Dividend Payout Ratio

14.7%

Return on Equity

51.8%

5 year Total Return

9.5%

Projected EPS Growth

15.5%

Analysts Recommendations

Buy

Potash Corp (POT)

Potash Corp is the world’s largest fertilizer company. I assume everyone knows about this company and its epic and sadly nationalistic takeover battle with BHP Billiton. You may be surprised to see it on a list of dividend growth stocks. After all, Potash Corp is usually thought of as a growth stock – and for good reason! The stock has appreciated almost 800% in value this past decade.

I know the current yield is a paltry .06% but I think Potash Corp deserves a second look from dividend growth investors. After all, it is pretty hard to run up a decent yield with 800% price appreciation. This stock has an amazing dividend growth rate of 33% -- the highest of any companies on this list. Potash Corp.'s last dividend increase was 110%. Pretty easy to calculate how many years it would take for the yield to double!

During this recent dip, I added to my Potash holdings hoping for an awesome yield on cost in ten years. And if at the end of the decade this stock still has a paltry yield because the market forced another 800% price appreciation on me…well, that is just a risk I am going to have to take.

Potash Corp Key Metrics

Dividend Yield

0.6%

1 year Dividend Growth Rate

110%

5 year Dividend Growth Rate

33.2%

Dividend Payout Ratio

7.8%

Return on Equity

32.7%

5 year Total Return

25.1%

Projected EPS Growth

17.4%

Analysts Recommendations

Buy

Barrick Gold Corp (ABX)

If you are the kind of dividend growth investors who only owns telecoms and utilities, well then shame on you! Let’s spice things up – and get some much needed portfolio diversification -- with precious metals.

My favorite dividend growth stock in the precious metals space right now is Barrick Gold Corp. It is a major gold producer with a large portfolio of gold projects spread across five different companies. The last several years it has been hiking dividends significantly. Would you like to know what is even better than last year’s 25% dividend increase? The fact that Barrick’s profit growth was even larger at 47%.

Even with all this generous dividend hiking, Barrick’s payout ratio is still in the single digits. Yet, another sad case of a company that has more cash than they know what to do with. For what it’s worth, I’m going to line up for my share.

Barrick Gold Corp Key Metrics

Dividend Yield

1.21%

1 year Dividend Growth Rate

25.0%

5 year Dividend Growth Rate

22.2%

Dividend Payout Ratio

8.9%

Return on Equity

18.4%

5 year Total Return

8.1%

Projected EPS Growth

22.4%

Analysts Recommendations

Buy

Source: In Search Of Explosive Dividend Growth