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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our investing reporters and editors focus on the points consumers care about most — how to get started, the best brokers, types of investment accounts, how to choose investments and more — so you can feel confident when investing your money. Investing disclosure: The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Dividend stocks are one of the most popular ways to invest. They can deliver cash into your pocket, regardless of how the stock market is performing. And among the strongest dividend payers are the stocks in the (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. Best S&P 500 stocks for 5-year dividend growth
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 are now making significant payouts. (Data as of Sept. 9, 2022) Company 5-yr dividend growth Dividend yield Cigna (CI) 151.2% 1.5% Pioneer Natural Resources (PXD) 143.4% 8.7% Newmont (NEM) 77.5% 5.2% Advance Auto Parts (AAP) 68.4% 3.3% Coterra Energy (CTRA) 50.6% 8.9% Broadcom (AVGO) 49.3% 3.3% Lennar (LEN) 44.3% 1.9% Zions Bancorporation (ZION) 38.8% 2.8% Citigroup (C) 37.2% 4.2% Devon Energy (DVN) 34.7% 9.0% 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. Best S&P 500 stocks for 10-year dividend growth
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) Cigna Corp (CI)58.5%1.5% Company 10-yr dividend growth Dividend yield Pioneer Natural Resources (PXD) 56.0% 8.7% Citigroup Inc (C) 52.5% 4.2% Amphenol (APH) 45.4% 1.1% Broadcom (AVGO) 45.0% 3.3% Zions Bancorporation (ZION) 43.1% 2.8% Mastercard (MA) 40.2% 0.6% Coterra Energy (CTRA) 35.4% 8.9% Bank of America (BAC) 34.6% 2.6% Regions Financial (RF) 31.9% 3.6% Source: Charles Schwab, Yahoo Finance What to consider when investing in dividend stocks
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: Current dividend yield: A current dividend yield that is too high might indicate that there’s trouble with the business or that investors suspect the dividend will be cut soon. On the other hand, for a dividend that’s very low – think 0.5 percent or less – it may not be worth waiting on growth in future years if you’re relying exclusively on the income. Payout ratio: The payout ratio is the dividend divided by the company’s profit. If this number regularly exceeds 100 percent or is close to it, then you should expect the dividend to be cut. In general, the lower the payout ratio, the safer the dividend. A lower payout ratio also gives the company room to increase its dividend, too. Business stability: Does the dividend-paying company have a sustainable business? The more stable the business, the more likely it will be able to pay and grow its dividend for years. Energy companies, for example, often experience boom-and-bust cycles as the price of oil and other energy sources ebbs and flows. So they may not be the safest dividend stocks. Timing: Some companies have high dividend growth because the measurement period started at a favorable time. For example, banks were just recovering from the financial crisis a decade ago and their dividends were limited. As the economy normalized, they were allowed to pay higher dividends, and many ramped their payouts and may not be able to offer such fast growth again. So be careful of the time period that’s measured. Companies that have paid dividends for years may offer the safest dividend stocks. Among the strongest are the , 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. , enjoying the power of compounding dividends over time. And are those that allow you to buy fractional shares, letting you put your entire dividend to work. Bottom line
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. SHARE: Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles