Understanding Dividend Growth Stocks

Proprietary Data Insights

Top Dividend Aristocrat Searches This Month

#1Procter & Gamble Company20,083
#23M Company14,862
#3Emerson Electric Company3,462
#4Genuine Parts Company2,616
#5Dover Corp879

All About Dividends And Income  

Source: Google Finance 

A telling moment in time. 

As the Dow and S&P 500 tanked Thursday morning – off 2.4% and 3.3%, respectively – Procter & Gamble (PG) rallied. For no specific, news-driven reason. 

Rather, investors flocked to the stock for two big reasons: 

  • PG sells staples. Consumer necessities at various price points. As The Juice detailed last month, you need toothpaste. It’s one of the many things Procter & Gamble sells you won’t stop buying amid high inflation, rising interest rates, and a (potential/probable) recession. 
  • PG is a dividend aristocrat with a 66-year streak of annual dividend increases. The Juice gave you the lowdown on dividend aristocrats in April. 

Today’s top five stocks, pulled from our proprietary Trackstar database, show how the dividend aristocrats with the longest histories of dividend increases rank in terms of interest. Each stock on the list has raised its dividend payment – every year – for 64 or more years. 

While all five of these stocks might make sense for your portfolio in the present environment, dividend increase streaks aren’t the only factor to consider. 

Scroll with us to learn about the power of dividend growth.

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Understanding Dividend Growth Stocks

Key Takeaways:

  • Look for dividend growth as you consider investing in dividend stocks. 
  • Annual dividend increases can help stoke the value of your investment. 
  • The Juice offers a few ideas, highlighting one big name to illustrate the power and potential of dividend growth investing. 


Source: InvestoGraphics

Dividend Growth Rate explained. If a company paid a $1.00 dividend in 2021 and raised that dividend to $1.10 in 2022, it has a one-year dividend growth rate of 10%. Ideally, you want to look for stocks with longevity and growth in their dividend increases. 

While there’s no magic formula, a 5% or higher dividend growth rate alongside dividend aristocrat status (that is, a company that has increased its dividend, every year, for at least 25 years) is a good place to start if you’re seeking best of breed, blue chip names. 

A few companies on this handy infographic meet these criteria. 

The Juice highlights three of them. 

Abbvie (ABV) and Abbott (ABT): Abbvie and Abbott used to be the same company. Then, in 2013, Abbott spun off the research arm of its business, spawning Abbvie. 

Abbvie has increased its dividend since 2013. Abbott for 50 consecutive years, making both dividend aristocrats. Since its inception as a standalone company, Abbvie has increased its dividend by roughly 250%. 

Next Era Energy (NEE): NEE has a 28-year history of increasing dividends. Over the past three years, NEE has increased its dividend by 11.83% annually.

Source: Google Finance 

That’s a look at how each of the three stocks have performed over the last year against the S&P 500 (SPY). All have outperformed the index with ABBV leading the way. 

Digging Deeper To Show The Power Of Dividend Growth

MarketBeat has a nice little calculator you can use to predict the performance of dividend growth stocks. 

To further illustrate things, let’s take a look, using widely-held Abbott. 

Five years ago, ABT traded for $48.21. Today it trades for roughly $101.42. So, the value of 100 Abbott shares five years ago was $4,821. Today, it’s $10,142, good for a 110% increase. 

Not bad, however, this doesn’t take dividend growth and reinvestment into account. 

Using Abbott’s current dividend yield (1.85%), five-year dividend growth rate (11.9%), and a conservative five-year share price appreciation prediction of 5%, we can make an educated guess to determine the total return of 100 shares of ABT over the next five years, accounting for the growing dividend. 

It’s rough math, but you get the picture. Factor in the dividend and you boost your income – and total return – meaningfully. 

Take away the dividend growth and revinestment and, based on share price alone, 100 shares of ABT would be worth just $12,921. Not too shabby, but not nearly as nice as the dividend-adjusted amount of $14,283. 

The Bottom Line: Amid inflation, rising interest rates, and a looming recession, you might be looking for the best places to invest your money. Today, The Juice hopes to have made the mechanics of one option – dividend growth stocks – just a bit more clear.

While there are no guarantees, it’s worth taking a look at stocks you expect to generate consistent and growing income as you wait out a bear stock market with an eye on your unique short- and long-term goals and needs.

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