Best S&P 500 Stocks For Dividend Growth – Bankrate.com

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Dividend stocks are one of the most popular ways to invest. They can deliver cash into your pocket, giving you a real return regardless of how the stock market is performing. And among the strongest dividend payers are the stocks in the Standard & Poor’s 500 Index (S&P 500), a collection of about 500 of America’s largest and most profitable businesses.
Here are some of the S&P 500’s fastest-growing dividends over the last five and ten years.
The stocks with the best five-year growth rates have usually just started paying out a dividend or they’ve started to emphasize dividends as part of their capital allocation program. So it’s not unusual to see companies with extraordinarily high dividend growth rates over the recent past.
The trade-off for that high growth is usually a lower dividend yield, relative to slower growers. However, many energy companies are now making significant payouts. (Data as of Sept. 9, 2022)
Source: Charles Schwab, Yahoo Finance
Now compare that list with the companies that have been able to keep up the fast growth for a decade.
Compared with the top growth rates over the last five years, it’s almost impossible for a company to maintain that torrid pace for a full decade. But many companies do still put up very fast growth rates over the prior 10 years.
In many cases, such as the banks, companies started growing their dividend from low levels in the wake of the financial crisis, so the numbers are mostly a result of that. (Data as of Sept. 9)
Source: Charles Schwab, Yahoo Finance
While high dividend growth is attractive, you also need to analyze whether the dividend is sustainable before you run off and buy the stock. Here are a few things to check on:
Companies that have paid dividends for years may offer the safest dividend stocks. Among the strongest are the Dividend Aristocrats, a prestigious group of companies that have paid and raised their dividends for 25 years and more. They’re also a strong place to begin your search.
If you’re looking to build a portfolio that’s a dividend dynamo, then it’s useful to reinvest your dividends. You can automatically use your dividends to buy more shares of the stock, enjoying the power of compounding dividends over time. And the best brokers for reinvested dividends are those that allow you to buy fractional shares, letting you put your entire dividend to work.
Looking at a list of the fastest-growing dividend stocks is a good place to start when you’re looking for attractive dividends, but it’s only a start. You’ll want to investigate and understand why the company is rapidly increasing its payout. But companies with a long-term track record of paying out a growing stream of dividends are loath to cut them, so look for firms with competitive advantages that will allow them to grow their payouts for years to come.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
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