The “Accelerators”: 13 Dividend Stocks With Rapidly Growing Payouts
Dividend growth stocks are a time-honored tool for building wealth. Implementing a dividend growth strategy begins with identifying well-managed companies that have solid balance sheets and steadily rising earnings. After all, what company would hike dividends if they anticipated future earnings would decline?
A major advantage of dividend growth investing is the likelihood of capturing some total return even if the share price stagnates. For instance, depending on the length of time held, dividends account for anywhere between 27% and 60% of the total return of the Standard & Poor's 500-stock index. Dividend growth investing also lets you leverage the exponential growth that comes from compounding of reinvested dividends, and it's a hedge against inflation, as rising payouts counter the effect of the dollar's shrinking purchasing power. Better still, dividend growth stocks also have been shown to outperform non-dividend payers and the overall market.
While any dividend growth is better than no growth, the best scenario is a stock whose payout is actually accelerating; your yield on cost will rapidly rise, eventually overtaking and exceeding the yields of stocks with high but stagnant payouts.
Here's a look at 13 "Dividend Accelerators": a group of well-known dividend stocks that have recently ramped up their payout growth.
Steris
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Market value: $9.7 billion
5-year dividend CAGR: 10.2%
Dividend yield: 1.2%
Steris (STE, $113.47) provides sterilization products and related services to hospitals, pharmaceutical makers and life science labs in more than 100 countries. Rising health care spending, heightened public awareness of the risks posed by hospital infections and greater regulatory scrutiny of sterile procedures in pharmaceutical manufacturing are all trends raising demand for the company's products.
Steris has generated an 8% compound annual growth rate in sales and 11% CAGR in earnings per share over the past decade. Acquisitions have boosted the recurring component of the company's revenues from 50% to 75% and created a more predictable cash flow stream for supporting double-digit dividend growth.
Steris' free
