There are lots and lots of solid dividend growth companies with long histories of annually increasing dividend payments.  Some companies have been paying out growing dividend rates for 50 plus years.  These companies like Coca-Cola and Johnson & Johnson are staples amongst many dividend growth portfolios.  But even these legends had to start at the beginning.  Every streak must have a first year increase.  It is hard telling which new dividend growers will end up among the legends but it is fun seeking them out.

Here are 10 companies that are within the first few years of a dividend growth streak.  Will any of these become the next King of Dividend Growth?  I don’t know but it’s worth looking into and possibly considering some of these companies for our dividend growth portfolios.

  1. General Electric (GE) – General Electric used to be among the favorite dividend growth companies.  However, many investors got burned when GE Capital took on too much risk and the company was forced to cut their dividend back in 2009.  However, GE has made it through the recession and has been decreasing operations risk to hopefully avoid these disasters in the future.  General Electric is a staple blue chip company that has now been growing their dividend for 3 years.
  2. Wells Fargo (WFC) – Wells Fargo was another old dividend growth favorite before the financial collapse in 2008.  Wells Fargo is a bank and was thus hit hard during the recession being forced to cut their dividend in 2009.  They have since been growing their dividend rate for 3 years in a row.  They are possibly one of the strongest U.S. banks worth considering owning and they have the backing of famed investor Warren Buffett.
  3. Apple (AAPL) - Apple is the famed maker of IPods, IPhones and IPads.  The company is currently sitting on a boat load of cash and recently begun paying out some cash to shareholders through dividend payments beginning in 2012.  They have since increased their rate for the first time.  Could this be the start of a long dividend growth streak?  Hard telling but Apple may be worth considering as it is currently trading at a P/E of around 10.  If Apple can continue to innovate going forward like they have been able to in the past, they could turn out to be a great investment.  If not, then this great company may take a fall.  Is it worth the risk for your portfolio?
  4. Bristol-Myers Squibb (BMY) – Bristol Myers is a pharmaceutical company.  They have a long history of dividend payments but have just begun growing that dividend over the past 4 years.  BMY currently offers a dividend yield over 3%.
  5. Dr. Pepper Snapple Group (DPS) - Many people own the beverage giants Coca Cola and PepsiCo.  Well Dr Pepper Snapple Group is another worth possibly considering.  DPS begun paying a dividend in 2009 and has increased every year since.  They are currently yielding over 3%.
  6. Home Depot (HD) - This home improvement store has been growing dividends for 4 years.  As the economy improves, home improvement stores should do well with many taking on special projects around the house.  HD has a current dividend yield just below 2% and a P/E above 25.
  7. Mattel (MAT) - Who doesn’t love toys?  Mattel’s main competitor Hasbro has a place in my dividend growth portfolio but Mattel may be worth a check as well.  They have been growing dividends annually for 4 years and currently offer a dividend yield near 3.3%.
  8. Tractor Supply Company (TSCO) - Tractor Supply operates retail farm and ranch stores in the United States.  They have been growing their dividend for 4 years in a row now.  While they do have the start of a dividend growth streak, unfortunately they are only yeilding just below 1% which will most likely scare off dividend growth investors.
  9. United Parcel Services (UPS) - This package delivery company has been growing dividends for 4 years.  They are currently offering a yield just below 3%.
  10. WD-40 Company (WDFC)- WD40 Company is a consumer products company that offers multiple products under its WD40 brand.  They have a nice 4 year start to a dividend growth streak.  Currenly WD40 is paying a dividend yield of just below 3%.

These are 10 companies that have the beginnings of what could be great dividend growth streaks.  I haven’t done thorough analysis of any company.  These are just ideas of companies that may be worth a further look into.  They could offer the potential for higher growth as they are just in the beginning stages of a dividend growth streak.  Or they could be duds and not worth our time.  If you are interested in any of the companies, be sure to do a complete dividend growth analysis before committing yourself to any investment.

If you are looking for more dividend growth stock ideas then be sure to check out my new book 35 Top Dividend Growth Stocks.

If you are looking for some other good financial reads then be sure to check out the Carnival of Personal Finance over at Funny Money where my article on creating a steady monthly dividend income was featured!

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13 Responses to 10 Potential Dividend Growth Companies Worth Considering

  1. I’ve been trying to look at some of the younger dividend growers because there should be more room for faster increases since they are generally smaller companies. I think DPS and GE are 2 companies to look more into. UPS could be interesting and I’m kind of surprised they only have a 4 year streak.

    • Dan Mac says:

      JC I think you may be right in that they could possibly have some room for faster growth. Out of this group I own GE and WFC. I’m also pretty interested in DPS and MAT but would need to do some further research on them.

  2. Looks like we both have future dividend grower on our mind today although you took a different approach than I did. This is a great list. I’m very interested in a few stocks on your list. Mostly MAT and WFC.

    • Dan Mac says:

      Hey Zach! I think the younger dividend growers are worth consideration from investors. Since they are in the beginning stages of a dividend growth streak, there may be more of a chance for larger increases. It can be fun trying to pick out the companies we believe will be the next dividend champions with 25+ years of dividend growth.

  3. Dan,

    Great list.

    I currently own a piece of GE and WFC, so I definitely agree with those picks!

    I’d say AAPL might be the biggest risk/reward scenario up there. If they can continue to innovate this would be a great time to scoop up some shares after the big pullback. If they can’t continue to innovate, then the growth will stop and the compressing margins will eat them alive. That cash pile can only last so long.

    Best wishes!

    • Dan Mac says:

      Thanks Dividend Mantra! I agree on AAPL and I’ll have to say it has been tempting for me lately. The price is fairly low compared to earnings and if they can innovate with some more good products I think investors buying in now will be greatly rewarded. But innovation is the big question. Everything I see lately about Apple seems to be more along the lines of recreating their old products with a bigger screen or new operating system. For awhile you can continue on by recreating newer versions of your same old products but eventually they will need the next breakthrough to continue their greatness of the past. Personally I’m not sure if it will happen which has been the one doubt keeping me from picking up any shares.

  4. I am scared of AAPL. I think the company may see some slow down in the near future as I doubt they can keep up the growth we witnessed in the past few years. Also I have heard that they actually borrowed money to pay the dividend, but I may be mistaken. But I agree it may be a good idea to add it to a watch list and see. Definitely WFC, BMY, DPS and MAT are the stocks worth a close eye watch.

    • Dan Mac says:

      Hi Martin, I agree AAPL is an unknown. It’s tempting because of the low current valuation but the future is so unknown that I am going to stay away. I also heard they borrowed some debt which I believe was used either for the dividend or share repurchases. However, with this current low interest rate environment you will actually find quite a few companies doing that currently. They are locking in some low interest long term debt to buy back shares. Then they have fewer shares to pay dividends on which will actually save them money in the long run. However, just must be careful to make sure the companies aren’t taking on too much debt.

  5. Only own 2 above.

    I avoid all tech. Too fickle of an industry sector. I own VTI instead.

    Not sure about MAT, TSCO, or WDFC though.

    • Dan Mac says:

      Hey Advisor! I also only own 2 of the above (GE and WFC). There are a few I’d be interested in looking more into though. But have to have the earnings and dividend growth to get me excited. Worth a closer look.

  6. [...] Dan Mac covers 10 stocks that could be the dividend growth stocks of the future. [...]

  7. Integrator says:

    Some nice stocks highlighted here. When looking at potential strong future high dividend growth candidates, I like to look at slightly smaller market caps <$1B, where revenue growth tends to be stronger, rather than a larger company that is just introducing a dividend, as growth will be capped by its slower rate of revenue growth. In general, I don't think investors can go wrong with the classic div growth companies that grow dividends 8-10% per year.

    I picked up Apple a few months back at $405 a share. Just a small holding. I think they will be okay just retooling existing products while coming out with the odd new form factor periodically, which I have no doubt they will continue to do (iwatch, tv, some variant of google glasses). They have such a strong ecosystem lock and intuitive User Experience that people will continue to purchase, though margins will decline over time.

    On Hasbro, interested in your thoughts on their future revenue profile. Seems fairly flat since 2008, payout ratio has picked up. Any thoughts on why and what may reverse the trend? Otherwise, its a fairly interesting space that should be a strong business, with opportunities to monetize IP in a bunch of ways like toys,books films etc, similar to Disney in some sense.

    • Dan Mac says:

      Hi Integrator. Thanks for your ideas on looking for good future dividend growers. Basically all I did here was look for some companies with the start of a dividend growth streak and highlight the ones I’ve heard of and would be interested in looking more into.

      As for Apple, that is an interesting one. I’m also fairly confident they will come out with some new products. I think I’m just too scared to take the plunge just based on my feelings. I like to look at solid financials and truly AAPL does have solid financials. If their dividend streak was a bit longer I probably would jump in with a small position.

      As for Hasbro, I haven’t looked at it most recently so I’d have to go back over my notes when I have them in front of me. I purchased Hasbro awhile back when the stock was cheaply valued in my opinion giving me a dividend yield over 4%. Not sure I’d be a buyer right now as the price has gone up considerably. Of course that seems to be the situation with most of the market.

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