5 Stocks Growing Their Dividends by 15% Per Year

Dividend investors would be wise to focus not just on a stock's current yield, but also on the long-term growth potential of its dividends. That's because strong businesses that consistently raise their dividend payouts reward shareholders with a steadily rising income stream that essentially equates to a raise every year. And, well, who doesn't like a raise?

But there are other reasons to value dividend growth so highly, and they're well supported by research. For instance, a study by C. Thomas Howard published in Advisor Perspectives found that for every percentage point a stock's yield rises, its annual return increases by 0.22 percentage points if it's a large cap, 0.25 if it's a mid cap, and 0.46 if it's a small cap. Even better, Howard found that dividend-growing stocks outperformed dividend cutters by 10 percentage points per year from 1973 to 2010 and beat both flat- and no-dividend stocks. And the icing on the cake is that Howard showed that this outperformance came with a third less volatility. Higher returns, less volatility-induced stress, and a steadily growing income stream -- what's not to love?

With that in mind, here are five stocks that have grown their dividends by 15% or more over the past year:

Company

1-Year Dividend Growth Rate

Yum! Brands

17.5%

Ross Stores

17%

Darden Restaurants

16.3%

B&G Foods

16.3%

Apache

15.6%


Source: S&P Capital IQ.

Yum! Brands is the company behind quick-service restaurants such as KFC, Pizza Hut, and Taco Bell. While the company is based in the U.S., it's very much a global operation, with 39,000 restaurants spread across 125 countries and territories. Yum! Brands currently has a four-star ranking on CAPS and offers investors a 1.8% yield.

Ross Stores operates two chains of off-price retail apparel and home accessories stores, under the Ross Dress for Less and dd's DISCOUNTS brand names in the United States. They target value-conscious women and men between 18 and 54, primarily from middle-income households. Ross Stores currently sports a four-star rating in CAPS and is paying a growing 1% dividend.

Darden Restaurants owns and operates full-service restaurants in the United States and Canada, including Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, and Wildfish Seafood Grille. Darden Restaurants currently has only a two-star rating in CAPS, but it offers investors a tasty 4.3% yield.

B&G Foods manufactures, sells, and distributes shelf-stable foods and household products in the United States, Canada, and Puerto Rico. Some of its offerings include canned beans, pickles, meat spreads, gourmet salad dressings, hot cereals, fruit-based spreads, sauces, and syrups. CAPS participants have awarded B&G Foods with the highest five-star rating, and the company is paying out a solid 3.7% dividend.

Apache is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids. This Fool favorite has a top five-star CAPS rating and offers investors a rising 1% dividend.

The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 15% to nearly 18%. That level of growth would provide a substantial boost to just about any investor's dividend income. But more important to investors today is to identify the companies that will grow their dividends substantially in the years ahead. If you're interested in hearing about some excellent companies that are likely to boost their dividends from this point forward, I'd like to offer you a brand-new free report from The Motley Fool's expert analysts called "Secure Your Future With 9 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. To discover the identities of these companies before the rest of the market catches on, you can access this valuable free report by simply clicking here now.

The article 5 Stocks Growing Their Dividends by 15% Per Year originally appeared on Fool.com.

Joe Tenebruso manages a Real-Money Portfolio for The Motley Fool and is an analyst on the Fool's Stock Advisor and Supernova premium service teams. You can connect with him on Twitter: @Tier1Investor. Joe has no position in any stocks mentioned. The Motley Fool owns shares of Apache and Darden Restaurants. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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