Dividends4Life: Stocks Growing Their Dividends by 20% Per Year

As part of our process, we focus not just on a stock's current yield, but also on the long-term growth potential of its dividends. We understand that many of our members rely on these dividend payments as a source of income, and well, who doesn't like a raise? 
 But there are other reasons we 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 point 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 more than 20% annually over the last five years: Flowers Foods (NYSE: FLO), IBM (NYSE: IBM), Lockheed Martin (NYSE: LMT), McDonald's (NYSE: MCD) and Hasbro (Nasdaq: HAS).

Source: Motley Fool

Related Articles:
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- Finding Low Risk Dividend Stocks
- Why We Are Dividend Growth Investors
- What Determines A Dividend Stock's Yield
- Managing Risk With Dividend Stocks

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