The dividend growth rate (DGR) is an important aspect when analyzing dividend stocks, not only to identify the best dividend growers but also to help you as dividend investors to keep up with inflation.
In brief:
- The current stock market is driven by concerns that higher inflation could lead to a change in the FED’s monetary stimulus.
- In this article, we list the top-10 Dividend Aristocrats with the fastest dividend growth rate (DGR) over the last three years for you.
- In the end, inflation fears will increase volatility and could create buying opportunities for buy & hold investors.
Dividend Growth and the S&P 500
Dividend growth means that the company should generate robust free cash flow. Free cash flow is defined as a company’s operating cash flow minus capital expenditures. The strong free cash flow allows a companies’ management to pay a higher dividend growth rate. Since 1990, the average or mean annual dividend growth rate for the S&P 500 index has been 5.96%. The current S&P 500 dividend growth is negative -3.27%.
Top-10 fast-growing dividend aristocrats
For dividend aristocrats, we use the following indication for their dividend growth rate (3 years period):
DGR between 5% and 9%: average growth rate
DGR between 10% and 12.5%: fast growth rate
DGR above 12.5%: very fast growth rate
The table below lists the top ten dividend aristocrats and their current dividend yield, DGR for 3,5, and 10 years.
Members can use the DGR screener(s).
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market in the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors, there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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