These 10 Dividend Growth Stocks Could Increase Their Dividends By 10%+ Per Year

Up to date on Might eleventh, 2022 by Bob Ciura

Revenue traders could tend to give attention to shares with the best dividend yields. However dividend progress can also be an essential consideration when setting up an income-focused portfolio.

Whereas high-yield shares are interesting for the earnings they supply right now, dividend progress shares are equally interesting as a result of potential for even larger dividends down the highway.

For instance, the Dividend Aristocrats are an unique group of high-quality dividend progress shares. The Dividend Aristocrats signify 65 firms within the S&P 500 Index, which have every raised their dividends for at the least 25 consecutive years.

You may obtain an Excel spreadsheet of all 65 (with metrics that matter) by clicking the hyperlink beneath:

The Dividend Aristocrats are extensively considered among the many finest dividend progress shares an investor should purchase. However they didn’t begin out as Dividend Aristocrats. Additionally it is helpful for traders to contemplate shares that won’t have as lengthy of a dividend historical past proper now, however have the potential to grow to be the following Dividend Aristocrats.

Traders ought to give attention to high-quality firms with sturdy aggressive benefits, constant progress, and the flexibility to lift their dividends over the long run.

These 10 dividend progress shares should not all on the listing of Dividend Aristocrats. However in any case, they’ve the potential to lift their dividends at a excessive charge every year, and maybe be among the many future Dividend Aristocrats.

Desk Of Contents

The highest 10 listing is comprised of shares with dividend yields at or above the S&P 500 common (at present 1.5%), in addition to ahead payout ratios beneath 25%. All the shares have Dividend Danger scores of ‘C’ or higher.

Lastly, all 10 shares have optimistic anticipated EPS progress over the following 5 years of at the least 5% per 12 months.

You may immediately bounce to a selected inventory by clicking on the hyperlinks beneath:

Dividend Development Inventory #10: Microchip Applied sciences (MCHP)

Microchip Expertise develops, manufactures, and sells good, related and safe embedded management options used for all kinds of purposes. These embody disruptive progress traits reminiscent of 5G, synthetic intelligence, Web of Issues (IoT), and autonomous driving, amongst others, in key finish markets reminiscent of automotive, aerospace and protection, communications.

The corporate’s strategic focus is that these options are cost-effective, supply excessive efficiency, with a large voltage vary operation, at extraordinarily low energy utilization. Microchip Expertise generates round $6 billion in annual revenues.

On February third, 2022, Microchip Expertise reported its Q3-2022 outcomes for the quarter ending December thirty first, 2021. Web gross sales had been a document $1.79 billion, up 30% from the comparable interval final 12 months and 6.8% larger sequentially. Larger revenues had been once more powered by distinctive execution on delivering Microchip’s backlog and powerful underlying demand regardless of the continued manufacturing capability constraints amid provide chain constraints.

On a non-GAAP foundation, EPS was $1.20 versus $0.81 in Q3-2021. Microchip as soon as once more hiked its quarterly dividend 9.1% sequentially, or 29.7% year-over-year, to $0.253.

Click on right here to obtain our most up-to-date Positive Evaluation report on MCHP (preview of web page 1 of three proven beneath):

Dividend Development Inventory #9: Skyworks Options (SWKS)

Skyworks Options is a semiconductor firm that designs, develops, and markets proprietary semiconductor merchandise used worldwide. Its merchandise embody antenna tuners, amplifiers, converters, modulators, receivers, and switches.

In the newest quarter, income grew 15% year-over-year. Adjusted diluted earnings per share of $3.14 in comparison with $3.36 per share in the identical quarter final 12 months. General, Skyworks delivered first-quarter stable outcomes, with double-digit sequential progress in each income and earnings per share.

Skyworks has a powerful steadiness sheet with over $1 billion in money and money equivalents and no debt. This offers the corporate super flexibility and resiliency to offset a few of its concentrated buyer base dangers and transfer ahead with its progress plans. The dividend may be very effectively coated by earnings, and we contemplate it very secure.

Click on right here to obtain our most up-to-date Positive Evaluation report on SWKS (preview of web page 1 of three proven beneath):

Dividend Development Inventory #8: Cigna Company (CI)

Cigna is a number one supplier of insurance coverage services. The corporate’s merchandise embody dental, medical, incapacity and life insurance coverage that it gives by way of employer-sponsored, government-sponsored and particular person protection plans.

The corporate has generated double-digit EPS progress over the previous a number of years, even throughout recessions and the coronavirus pandemic.

Supply: Investor Presentation

Cigna operates 4 enterprise segments, together with Evernorth, which gives pharmacy companies and profit administration, U.S. Medical, which gives industrial and authorities medical health insurance, Worldwide Markets and Group Incapacity. Evernorth contributes 70% of annual revenues whereas Cigna Healthcare accounts for twenty-four%. Cigna has annual revenues of ~$180 billion.

On Might sixth, 2022, Cigna reported first quarter outcomes for the interval ending March thirty first, 2022. For the quarter, income grew 7.4% to $44 billion, beating estimates by $530 million. Adjusted earnings-per-share of $6.01 in comparison with adjusted earnings-per-share of $4.73 within the prior 12 months and was $0.83 above expectations.

Whole pharmacy prospects grew 6.4% to 107.4 million. Whole medical prospects grew 6.6% year-over-year to 17.8 million and was 4.2% larger quarter-over-quarter.

Cigna supplied an up to date outlook for 2022 as effectively. Income continues to be anticipated to be least $177 billion for the 12 months. The corporate now tasks adjusted earnings-per-share of at the least $22.60, in comparison with $22.40 beforehand.

Click on right here to obtain our most up-to-date Positive Evaluation report on Cigna (preview of web page 1 of three proven beneath):

Dividend Development Inventory #7: Jack within the Field (JACK)

Jack within the Field is a fast-food chain that operates and franchises hamburger chains within the U.S., with greater than 2,200
eating places in 21 states and Guam.

On December sixth, 2021, Jack within the Field introduced that it’s going to purchase Del Taco for $575 million in money. The corporate expects the deal to develop its earnings-per-share at a mid-single-digit charge after the primary 12 months.

Supply: Investor Presentation

The deal is predicted to shut within the first calendar quarter of 2022 and can be funded by way of the issuance of debt.

In late February, Jack within the Field reported (2/23/22) monetary outcomes for the primary quarter of fiscal 2022 (ending 9/30/22). The corporate continued to face nice inflationary pressures, together with 11% wage inflation and elevated bills for meals, packaging and utilities.

Administration has supplied a optimistic 5-year outlook, anticipating 3%-5% annual gross sales progress because of 2%-3% same-store gross sales progress and 1%-3% unit progress.

In 2021, the corporate elevated its dividend by 10%. The inventory has a 2022 projected dividend payout ratio of 24.4%.

Click on right here to obtain our most up-to-date Positive Evaluation report on JACK (preview of web page 1 of three proven beneath):

Dividend Development Inventory #6: Tennant Co. (TNC)

Tennant Firm is a equipment firm that produces cleansing merchandise and that provides cleansing options to its prospects. Within the US, the corporate holds the market management place in its trade, however the firm additionally sells its merchandise in additional than 100 further nations across the globe. Tennant was based in 1870.

Tennant Firm reported its fourth quarter earnings outcomes on February 24. The corporate introduced that it generated revenues of $280 million through the quarter, which was 1% greater than the highest line quantity from the earlier 12 months’s quarter. Revenues continued to get well from the earlier 12 months, which was nonetheless feeling some lingering results of the pandemic. Revenues additionally had been up barely on a sequential foundation.

Supply: Investor Presentation

Tennant Firm generated earnings-per-share of $0.71 through the fourth quarter, which was greater than what the analyst neighborhood had forecasted, because the consensus estimate was overwhelmed by $0.08. The corporate hit the high-end of its earnings-per-share steering for 2021, with earnings-per-share coming in at $4.39, up strongly versus 2021.

Administration is forecasting that adjusted earnings-per-share will fall into a variety of $4.40 to $5.00 in 2022, which might be a powerful enchancment versus 2021, and which suggests new document earnings for the present 12 months.

Tennant final elevated its dividend by 9% in 2021.

Click on right here to obtain our most up-to-date Positive Evaluation report on Tennant (preview of web page 1 of three proven beneath):

Dividend Development Inventory #5: Ameriprise Monetary (AMP)

Ameriprise Monetary has greater than $1 trillion in property below administration. The corporate’s working segments embody Recommendation & Wealth Administration, Asset Administration, Annuities, and Safety (insurance coverage merchandise).

On April twenty fifth, 2022, Ameriprise Monetary elevated its quarterly dividend 10.6% to $1.25, extending the corporate’s dividend progress streak to 18 consecutive years.

On April twenty fifth, 2022, Ameriprise Monetary introduced first quarter earnings outcomes for the interval ending March thirty first, 2022. Income improved 9.3% to $3.66 billion, however was $60 million decrease than anticipated. Adjusted earnings-per-share of $5.98 in contrast favorably to the prior 12 months’s results of $5.43 and was $0.08 above estimates. Whole property below administration, or AUMs, elevated 17% to $1.3 trillion.

Click on right here to obtain our most up-to-date Positive Evaluation report on Ameriprise (preview of web page 1 of three proven beneath):

Dividend Development Inventory #4: Dover Company (DOV)

Dover Company is a diversified international industrial producer with annual revenues of simply over $6 billion. Dover consists of 5 reporting segments: Engineered Techniques, Clear Vitality & Fueling, Pumps & Course of Options, Imaging & Identification and Local weather & Sustainability Applied sciences. Barely greater than half of revenues come from the U.S., with the rest coming from worldwide markets.

On August fifth, 2021, Dover introduced that it was elevating its dividend 1% for the September fifteenth, 2021 cost, marking 66 consecutive years of dividend progress. That is the second-longest dividend progress streak amongst U.S. firms.

On April twenty first, 2022 Dover reported first quarter earnings outcomes for the interval ending March thirty first, 2022. Income elevated almost 10% to $2.05 billion, topping estimates by $20 million. Adjusted earnings-per-share of $1.90 in contrast favorably to $1.81 within the prior 12 months and was $0.07 higher than anticipated.

Natural income stays robust, with the corporate seeing a 9% achieve within the first quarter. Dover’s backlog grew 54% year-over-year and 5% quarter-over-quarter to $3.4 billion.

Dover reaffirmed steering for 2022. Adjusted earnings-per-share are anticipated in a variety of $8.45 to $8.65 with income projected to develop 8% to 10%, together with 7% to 9% natural progress.

Click on right here to obtain our most up-to-date Positive Evaluation report on Dover (preview of web page 1 of three proven beneath):

Dividend Development Inventory #3: Qualcomm Inc. (QCOM)

Qualcomm, as it’s recognized right now, develops and sells built-in circuits to be used in voice and knowledge communications. The chip maker receives royalty funds for its patents utilized in gadgets which might be on 3G and 4G networks.

On April twenty seventh, 2022, Qualcomm introduced outcomes for the second quarter of fiscal 12 months 2022 for the interval ending March thirty first, 2022 (the corporate’s fiscal 12 months ends September thirtieth, 2022). Income surged 41.1% to $11.2 billion, topping expectations by $600 million. Adjusted earnings-per-share of $3.21 in contrast very favorably to $1.90 within the earlier 12 months and was $0.29 forward of estimates.

Qualcomm not too long ago elevated its dividend by 10%, and the inventory now yields 2.2%. The corporate has elevated its dividend for 20 consecutive years.

Click on right here to obtain our most up-to-date Positive Evaluation report on Qualcomm (preview of web page 1 of three proven beneath):

Dividend Development Inventory #2: Lowe’s Corporations (LOW)

Lowe’s Corporations is the second-largest residence enchancment retailer within the US (after House Depot). Lowe’s operates or services greater than 2,200 residence enchancment and {hardware} shops within the U.S. and Canada.

The corporate has generated robust progress up to now few years, fueled by the robust U.S. financial system and housing market.

Supply: Investor Presentation

Lowe’s reported fourth quarter and full 12 months outcomes on February 23rd . Total gross sales for the fourth quarter got here in at $21.3 billion in comparison with $20.3 billion in the identical quarter a 12 months in the past. Comparable gross sales elevated 5%, whereas U.S. residence enchancment comparable gross sales elevated 5.1%. Web earnings of $1.2 billion rose from $978 million in 4Q 2020. Diluted earnings per share of $1.78 was a 35% enhance from $1.32 a 12 months earlier.

For the complete fiscal 12 months, Lowe’s generated diluted EPS of $12.04. The corporate repurchased 16.3 million shares in 2021 for $13.1 billion. Moreover, they paid out $2 billion in dividends. The corporate stays in a powerful liquidity place with $1.1 billion of money and money equivalents.

The corporate supplied a fiscal 2022 outlook and believes they will obtain diluted EPS within the vary of $13.10 to $13.60 on whole gross sales of roughly $98 billion. Lowe’s expects to repurchase $12 billion price of frequent shares in 2022.

In 2021, Lowe’s elevated its dividend by 33%.

Click on right here to obtain our most up-to-date Positive Evaluation report on Lowe’s (preview of web page 1 of three proven beneath):

Dividend Development Inventory #1: Pentair plc (PNR)

Pentair operates as a pure–play water options firm with 3 segments: Aquatic Techniques, Filtration Options, and Circulation Applied sciences. Pentair was based in 1966. Pentair has elevated its dividend for greater than 4 many years in a row, when adjusted for spin–offs.

Pentair reported its first quarter earnings outcomes on April 21. Core gross sales, which excludes the influence of forex charge actions, acquisitions, and dispossessions, had been up 12% 12 months over 12 months.

Pentair recorded earnings-per-share of $0.85 for the primary quarter, which was up by 5% 12 months over 12 months.

You may see a snapshot of the corporate’s fiscal first-quarter leads to the picture beneath:

Supply: Investor Presentation

For fiscal 2022, Pentair is forecasting earnings-per-share in a variety of $3.70 to $3.80, which signifies stable earnings-per-share progress of round 13% in comparison with the $3.32 the corporate earned in 2021.

Click on right here to obtain our most up-to-date Positive Evaluation report on Pentair (preview of web page 1 of three proven beneath):

Remaining Ideas

Traders shouldn’t ignore dividend progress shares just because many have low present dividend yields. Corporations with robust enterprise fashions, aggressive benefits, and progress potential are enticing no matter their beginning yields. The truth is, shares with decrease dividend yields right now might truly outperform high-yield shares if they will develop their earnings and dividends at a excessive charge over the long-term.

Dividend progress unleashes the facility of compounding curiosity. There are numerous instances wherein dividend progress shares might produce the next yield on value over time than a inventory with the next present yield however little or no dividend progress. These 10 dividend progress shares have the potential to lift their dividends by 10% per 12 months or extra for the foreseeable future, which makes them a lovely mixture of dividend yield and progress.