Dividend growth stocks are the best kept secret on Wall Street. These companies provide early investors with a growing stream of dividend income, which increases their yields on cost. Few investors recognize the potential of solid companies paying yields of 2%-3% today that consistently grow distributions. Such investments could produce a double digit yield on cost over time to early investors. For example, investors who purchased Lowe's (LOW) shares 15 years ago are generating a 12.60% yield on cost today. Those lucky few who purchased when Lowe's became a dividend aristocrat 24 years ago are sitting on an yield on cost of over 100%.
Several dividend growth stocks increased distributions last week, which increased yields on cost for its investors. The companies include:
Lowe's Companies, Inc. (LOW), together with its subsidiaries, operates as a home improvement retailer in the United States, Canada, and Mexico. This dividend aristocrat raised its quarterly distributions by 27.30% to 14 cents/share. The company has consistently raised distributions for 49 years in a row. Yield: 2.30% (analysis) Per my entry criteria, I would consider initiating a position in the stock on dips below $22.50.
Donaldson Company, Inc. (DCI) engages in the manufacture and sale of filtration systems and replacement parts worldwide. The company operates in two segments, Engine Products and Industrial Products. The company raised its quarterly dividend by 15.40% to 15 cents/share. This marked the 25th consecutive annual dividend increase for this dividend champion. Yield: 1%
SEI Investments Company (SEIC) provides investment processing, fund processing, and investment management business outsourcing solutions to corporations, financial institutions, financial advisors, and high-net-worth families. The company raised its quarterly dividend by 20% to 12 cents/share. This dividend achiever has consistently raised distributions for 19 years in a row. Yield: 1.10%
Flowers Foods, Inc. (FLO) produces and markets bakery products in the United States. It operates in two segments, Direct-Store-Delivery (DSD) and Warehouse Delivery. The company raised its quarterly dividend by 12.50% to 22.50 cents/share. This marked the 10th consecutive annual dividend increase for the Flowers Foods. Yield: 2.80%
Bunge Limited (BG) engages in the agriculture and food businesses in approximately 30 countries. The company raised its quarterly dividend by 8.70% to 25 cents/share. This marked the 10th consecutive annual dividend increase for Bunge LTD. Yield: 1.40%
H. J. Heinz Company (HNZ) manufactures and markets food products for consumers, foodservice, and institutional customers. The company raised its quarterly dividend by 6.70% to 48 cents/share. This marked the seventh consecutive annual dividend increase for the company. Yield: 3.60%
Deere & Company (DE) provides products and services primarily for agriculture and forestry worldwide. The company operates in three segments: Agriculture and Turf, Construction and Forestry, and Credit. The company raised its quarterly dividend by 17.10% to 41 cents/share. This marked the ninth consecutive annual dividend increase for Deere. Yield: 1%
The Travelers Companies, Inc. (TRV), through its subsidiaries, provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. The company raised its quarterly distribution by 13.90% to 41 cents/share. Travelers has managed to raise distributions for 8 years in a row. Yield: 2.70%
Full Disclosure: None
- High Yield Dividend Stocks in Gurus' Portfolio
- Top dividend stocks of Warren Buffett
- Top dividend stocks of George Soros