In a volatile stock market, an investor looks for both income and growth of his portfolio. It could be realized by dividend growth stocks, which refers to selecting companies which have paid dividends consistently and have also consistently increased the payouts. Stocks which have a record of enhancing the shareholder returns with the help of regular dividend hikes make the portfolio of an investor immune to big swings in the stock prices during turbulent times and hence act as a hedge against political or economic uncertainty.
Consistent profitability helps the companies to sustain their dividends, and allows them to grow them on a steady basis. In this article, we have listed five stocks which have a notable history of dividend growth. All of these stocks showcase attractive qualities and are highly profitable, and can generate significant returns on capital. Listed Below are our top 5 stocks recommendations for 2018:
1. Thor Industries (THO – NYSE)
Thor Industries is the first on our top stock list. It’s quite likely that you’ve never heard of it before, however, it ranks in top S&P 500 dividend payers. This American RV company is an ace of dividend growth potential. Its dividend growth potential is reflected in its fundamentals. Between the year 2016 and 2017, its earnings per share grew 44 percent to $7.09, with 5-year annualized earnings growth rate of 28 percent
2. PepsiCo (PEP – NASDAQ)
Food and beverage giant PepsiCo, Inc. is one of the top choices for dividend growth investor. For instance, on February 13th, the company raised the dividend by 15 percent and announced $15 B share repurchase program. With dividend increase, the company has now raised the dividend payout for 46 successive years.
The company has a massive portfolio, which is split between food and beverages. Some of its key brands include sodas like Pepsi and Mountain Dew, and non-sparkling beverages such as Tropicana, Pure Leaf, Gatorade, etc. In addition to its core beverage brands, the company also has a huge snacks business under its Frito-Lay brand. PepsiCo has also created a portfolio of healthier food products which includes Quaker, Sabra, etc.
3. Chemours Company (CC – NYSE)
Delaware-based Chemours offers performance chemicals in entire North America, Europe, the Asia Pacific, Africa, Middle East, and Latin America. Chemours has seen good and positive earnings estimate revision of around 7 cents over past 30 days and the expected earnings growth rate is 40.58 percent.
4. Jones Lang LaSalle Inc. (JLL – NYSE)
Illinois-based Jones Lang LaSalle is a full-service real estate company providing management services, financial, investment management and corporate services to organizations and other investors and real estate owners worldwide. Jones Lang LaSalle Inc. has seen a robust earnings estimate revision of nearly 10 cents over the last thirty days the expected earnings growth rate is around 8.62 percent.
5. Avery Dennison Corporation (AVY – NYSE)
Avery Dennison Corporation is a California-based global leader in the pressure-sensitive label and labeling solutions for apparel and functional materials. The estimated earnings growth rate for Avery Dennison is 17.6 percent for 2018 and has offered positive earnings surprise of around 6.84 percent in the last 4 quarters.
The Bottom Line
While stocks with high dividend yields or high dividend payouts could be attractive, it is has been observed and researched that the stocks with higher dividend growth rates often outperform the other high dividend yielding stocks. Investors who are primarily seeking yield could expose themselves to the unnecessary risk, particularly in a volatile market environment. It’s believed that the dividend growth could be a better measure than the dividend yield alone.
High-yield stocks are good for the investors in the retired income group, but strong dividend growth could be better over the years. The dividend growth stocks provide higher income each year. They make your money work harder for you without you putting in any extra effort and are critical for creating wealth.
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