Growing their dividends each and every year for over 100 years means investors in these three stocks have been enjoying consistently growing total returns that won’t stop for any one market blip. All three stocks are great choices to boost the safety and returns of your portfolio.
Broadly speaking, dividend stocks are winners, and they have a long history of outperforming the market. However, some dividends win more than others.
Most investors flock to high dividend yields, and there’s nothing wrong with that, but there’s a key distinction between high-yielding dividends and those that are consistent dividend growers.
A dividend growth strategy is one focused on companies that have a history of increasing their dividends so that essentially you’re getting an automatic raise every time they increase their payouts.
In the short-term, a higher-yielding stock seems more rewarding. When opening your quarterly dividend check, the difference between a 2% dividend yield and a 6% yield will be a few hundred dollars for most investors.
However, studious investors are not into investing for the sexiness of it or the near-term benefits. The goal should be to find outperforming stocks over the long-term. And that’s just what consistent dividend growth stocks do — outperform.
Look at the Vanguard Dividend Appreciation ETF (NYSE: VIG), which invests in dividend growth stocks and compare it to the Vanguard High Dividend Yield Index ETF (NYSE: VYM), which focuses on high-yielding stocks.
Shares of the Dividend Appreciation ETF have outperformed the High Dividend Yield ETF by 21 percentage points over the last five years on a total return basis.
Part of this outperformance comes from the fact that companies that can consistently raise their dividends tend to have competitive advantages and the ability to generate cash flow in various economic environments.
With all that in mind, let’s have a look at 3 of the top dividend growers:
