Great Stocks With Rising Dividends

Investors don’t need to be sold on the beauty of dividends.

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Investors don’t need to be sold on the beauty of dividends. In a world of low interest rates, companies that share the wealth in the form of a cash payout have become the darlings of Wall Street. From the start of the year through mid June, money flowing into dividend-focused exchange-traded funds reached $7.4 billion—more than seven times the total for all of 2015, according to investment firm BlackRock.

Dividends have a lot to offer. Over the long haul, they have accounted for one-third of the total return of large-company U.S. stocks. But when investing in dividend-paying stocks, you need to be choosy. The highest-yielding stocks have rallied strongly in 2016.

Companies that boost their dividend payouts regularly typically exhibit qualities associated with superior stock performance over time including strong balance sheets and steady profit and revenue increases. According to Reality Shares, a dividend research firm and ETF sponsor, from 1972 through 2015, stocks in Standard & Poor’s 500-stock index with growing dividends returned 9.8% annualized, compared with 7.2% a year for companies with static dividends and 2.5% annualized for companies with no payout.

Here are seven companies with good dividend growth prospects.


Prices and related figures are as of July 18. Price-earnings ratios are based on estimated earnings over the next four quarters. According to rankings from Reality Shares, all seven of our picks have more than a 90% probability of increasing their dividends over the coming 12 months. Most have yields that beat the 2.1% current yield on the S&P 500; almost all beat the scant 1.6% offered by 10-year Treasury bonds.

Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.