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What are some of the best US-listed stocks for dividend growth? In order to balance out an income portfolio, it’s a good idea to balance out high yielding ‘cash preservers’ today, by also investing in companies with solid dividend growth, so that smaller pay out today becomes an immense source of income for us in the future.
Dividend growth is a good sign for investors, as it suggests that the company is in a strong financial position and is confident in its ability to continue to pay dividends in the future.
This article explores 10 US stocks that have a record of achieving over 10% annualised dividend growth in the past 10 years.
This is the average over that time period, some years may be higher, while others lower. I have looked at US listed companies and analysed their dividend growth from 2013 to 2023 to come up with a list of great additions to any income portfolio.
Morgan Stanley $MS
Morgan Stanley has an astonishing 10-year dividend growth rate of 31.21% annually! Looking back to 2013 an annual dividend payment represented a total pay-out 20 cents per share. Fast forward to 2023 and the trailing 12-month annual dividend is an incredible $3 dollars and 4 cents per share.
To show the power of this, let’s see what the current annual dividend represents compared to the price a shareholder would’ve paid for Morgan Stanley back in 2013. This is also known as the Yield on Cost.
At the beginning of 2013, Morgan Stanley was trading around $20 dollars per share. This means that the yield on cost in 2023 is equal to 15.20%! This is exactly why the compounding return of dividend growth stocks has awarded many investors financial freedom.
For comparative purposes, we will also look at the Yield-on-Cost for every stock on this list. All prices given are reflective of any stock splits that have taken place since the beginning of 2013.
A large majority of the dividend growth is down to the company’s decision to double the quarterly dividend in 2021, and this shows Morgan Stanley’s commitment to reward shareholders in form of capital return. The company has a current dividend yield of 3.53% and pays out dividends quarterly, typically in February, May, August, and November.
Tyson Foods $TSN
With a 10-year dividend growth rate of 26.44%, Tyson Foods is another strong candidate for an income portfolio. What was an annual dividend of 22.5 cents per share back in 2013 has now grown to $1 dollar and 90 cents per share.
At the beginning of 2013, Tyson Foods was trading around $20 dollars per share. Given the current dividend pay-out, this represents a 9.50% Yield-on-Cost.
Growth has slowed in recent years as the company has matured, but this shows that management is prudent and is prioritising dividend safety.
Tyson Foods also yields a healthy 3.17% and pays out dividends quarterly, typically in March, June, September and December.
Jeffries Financial Group $JEF
Next, we have Jeffries Financial Group, ticker symbol $JEF. Over the past 10 years, Jeffries has achieved an annualised dividend growth rate of 17.90%, with most of the growth coming in recent years. The company didn’t raise its dividend up until 2017, but since then, the annual dividend payment has risen from 47 cents per share in 2013 to $1 dollar and 20 cents per share in 2023.
At the beginning of 2013, Jeffries was trading at around $21 dollars per share. Given the latest trailing 12-month dividend, this represents a 5.71% Yield-on-Cost.
The yield is higher than the previous 2, sitting at 3.65% and is paid out quarterly, in February, May, August, and November.
With an astonishing 10-year annual growth rate of 38.50%, investors in Broadcom have been immensely rewarded in the form of dividends over the past 10 years.
What was an annual pay-out of 88 cents per share in 2013 has now become an incredible $17 dollars and 40 cents per share in 2023. This highlights the power of investing for dividend growth. What is more impressive with Broadcom, is the Yield-on-Cost.
Given the current annual pay-out and that Broadcom was trading at approximately $32 dollars and 50 cents per share at the beginning of 2013, this represents a monumental 53.54% Yield-on-Cost.
Broadcom also carries a respectable yield of 2.71% while paying out dividends quarterly, in March, June, September, and December.
While these stocks provide solid dividend growth over time, it’s also prudent to seek a return on the cash portion of your portfolio.
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While many would not expect to invest in Microsoft for income purposes, the company has achieved a 10-year compound annual dividend growth rate of 11.70%.
While it is lower on the list than other examples, investors have seen this counterbalanced by the extraordinary growth that the stock has achieved, soaring over 10 times in price from 2013.
But investors have also seen strong dividend growth. By investing in 2013, an annual dividend pay-out would have amounted to 97 cents per share. If you would’ve held the stock until today, you would receive an annual dividend of $2 dollars and 66 cents per share.
Given that Microsoft has seen tremendous growth since 2013, investors have realised a phenomenal Yield-on-Cost for the stock. With an approximate price of $27 dollars per share at the beginning of 2013, this represents a 9.85% Yield-on-Cost.
The stock has a current dividend yield of 0.94% and pays out quarterly, March, June, September, and December.
Lowe’s Corporation $LOW
Lowe’s has been a steady performer and popular income source for many investors over the years and has focused on returning capital to shareholders in the form of dividends. As a result, the stock has achieved a 10-year compound annual dividend growth rate of 20.34%.
To put this immense dividend growth over 10 years into perspective, a shareholder in 2013 would’ve received an annual dividend of 68 cents per share. Holding until today would have resulted in a trailing 12-month dividend of $4 dollars and 20 cents per share.
Given that Lowe’s was trading at around $36 dollars per share at the beginning of 2013, this represents an 11.67% Yield-on-Cost.
Lowe’s has a current dividend yield of 1.98% and pays out dividends quarterly, typically in January, April, July, and October.
From 2013 to 2023, Visa has achieved an annualised dividend growth rate of 19.62%. What was an annual dividend pay-out in 2013 of $1 dollar and 39 cents per share has now grown to $1 dollar and 65 cents per share. This is an outlier as 2013 saw a massive rise in the dividend pay-out, before re-basing to a lower level in 2015.
This does however provide a solid Yield-on-Cost relative to the current dividend yield. At the beginning of 2013, Visa was trading at approximately $39 dollars per share, which represents a 4.23% Yield-on-Cost.
Visa has a relatively low current dividend yield of 0.73% and pays out dividends quarterly, in March, June, September, and December.
Sherwin-Williams is one of the strongest dividend income candidates on this list. Not only has the company achieved a 10-year compound annual dividend growth rate of 15.76%, but the stock also has an astounding record of 44 years of consecutive dividend growth.
Looking back to 2013, what was an annual dividend pay-out of $2 dollars per share has now risen to $2 dollars and 40 cents in 2023.
Given that the stock has increased some 325% since the beginning of 2013, this also highlights to power of dividend growth and the prospects for a high Yield-on-Cost relative to the current dividend yield.
At the beginning of 2013, Sherwin-Williams was trading around $53 dollars per share. This represents a Yield-on-Cost of 4.53%, compared to a current dividend yield 1.07%. Sherwin-Williams pays out dividends quarterly, in March, June, September, and December.
JP Morgan $JPM
Over the past 10 years, JP Morgan has achieved a compound annual dividend growth rate of 16.09%. Looking back to 2013, investors would have received an annual pay-out of $1 dollar and 44 cents per share, which has now risen to $4 dollars per share.
With an approximate cost of $45 dollars per share the beginning of 2013, this represents a strong 8.89% Yield-on-Cost. JP Morgan yields a respectable current dividend of 3.07% and pays out dividends quarterly, in January, April, July, and October.
With a 10-year compound annual dividend growth rate of 17.34%, the annual dividend has grown from $2 dollars and 5 cents per share in 2013 to $9 dollars and 50 cents in 2023.
Given that the stock was trading around $135 dollars per share at the beginning of 2013, this represents a solid 7.03% Yield-on-Cost. Goldman Sachs provides a current dividend yield of 2.90% and pays out dividends quarterly, in March, June, September, and December.