Up to date on June 14th, 2023 by Bob Ciura
Revenue traders are likely to give attention to shares with the very best dividend yields. However dividend development can also be an vital consideration when developing an earnings portfolio.
Whereas high-yield shares are interesting for the earnings they supply within the short-term, one of the best dividend development shares are equally interesting as a result of potential for even greater dividend earnings over the long term.
For instance, the Dividend Aristocrats are among the many greatest dividend development shares. The Dividend Aristocrats signify 68 corporations within the S&P 500 Index, which have every raised their dividends for at the very least 25 consecutive years.
You’ll be able to obtain an Excel spreadsheet of all 68 (with metrics that matter) by clicking the hyperlink under:
The Dividend Aristocrats are broadly thought to be among the many greatest dividend development shares. However they didn’t begin out as Dividend Aristocrats.
It’s also helpful for traders to think about a number of the greatest dividend development shares that will not have as lengthy of a dividend historical past proper now, however have the potential to turn out to be the following Dividend Aristocrats.
Buyers ought to give attention to high-quality corporations with sturdy aggressive benefits, constant development, and the flexibility to lift their dividends over the long run.
These greatest dividend development shares will not be all on the record of Dividend Aristocrats. However in any case, they’ve the potential to lift their dividends at a excessive charge annually, and maybe be among the many future Dividend Aristocrats.
Desk Of Contents
The highest 12 greatest dividend development shares record is comprised of shares with dividend yields at or above the S&P 500 common (at present 1.6%), in addition to Dividend Threat scores of ‘C’ or higher.
Lastly, all 12 shares have constructive anticipated EPS development of at the very least 10% per yr, making them extra more likely to exhibit greater dividend development charges.
The most effective dividend development shares are listed by 5-year anticipated whole returns within the Positive Evaluation Analysis Database, so as of lowest to highest.
You’ll be able to immediately soar to a selected inventory by clicking on the hyperlinks under:
Dividend Progress Inventory #12: Starbucks Corp. (SBUX)
Starbucks has greater than 36,000 shops worldwide. About half of the shops are within the U.S., and practically 20% of the shops are in China. The corporate operates below the namesake Starbucks model but additionally holds the Teavana, Evolution Contemporary, and Ethos Water manufacturers in its portfolio. The corporate generated $32 billion in annual income in fiscal 2022.
In early Might, Starbucks reported (5/2/23) monetary outcomes for the second quarter of fiscal yr 2023. The corporate loved accelerated enterprise momentum and grew its comparable retailer gross sales 11% due to 12% development within the U.S. and seven% development in worldwide markets.
Supply: Investor Presentation
Adjusted earnings-per-share grew 25%, from $0.59 within the prior yr’s quarter to $0.74, and exceeded the analysts’ consensus by $0.09. The headwinds from the lockdowns in China and excessive inflation have subsided. Starbucks reiterated its constructive steering for 2023, anticipating development of earnings-per-share on the low finish of its long-term steering of 15%-20% development.
Starbucks is among the many greatest dividend development shares as a consequence of its world-class model and lengthy historical past of development.
Click on right here to obtain our most up-to-date Positive Evaluation report on Starbucks Company (SBUX) (preview of web page 1 of three proven under):
Dividend Progress Inventory #11: Yum Manufacturers (YUM)
Yum Manufacturers owns the KFC, Pizza Hut, Taco Bell, and The Behavior Eating places chains. It’s current in additional than 155 international locations and has greater than 54,000 eating places, 60% of that are situated overseas. KFC generates about half of the entire income and working revenue of the corporate.
In early Might, Yum Manufacturers reported (5/3/23) monetary outcomes for the primary quarter of 2023.
Supply: Investor Presentation
The corporate grew its currency-neutral gross sales 11% over the prior yr’s quarter thanks to eight% same-store gross sales development and three% development of retailer rely. KFC, Taco Bell, and Pizza Hut grew their gross sales 11%, 12% and 10%, respectively.
Click on right here to obtain our most up-to-date Positive Evaluation report on Yum Manufacturers (preview of web page 1 of three proven under):
Dividend Progress Inventory #10: Horace Mann Educators Corp. (HMN)
Horace Mann Educators Company was based in 1945 by two lecturers from Springfield, Illinois, who acknowledged the necessity for high quality and reasonably priced auto insurance coverage for lecturers. Right this moment, the corporate is the biggest monetary companies supplier that focuses on serving the schooling neighborhood and those that serve the neighborhood. The corporate’s major clients are educators, nevertheless it additionally serves people and organizations within the public sector.
Supply: Investor Presentation
Horace Mann presents a variety of monetary and insurance coverage merchandise, together with retirement annuities, life insurance coverage, and property and casualty insurance coverage. The corporate has a powerful market presence and is taken into account a pacesetter within the schooling insurance coverage market. General, Horace Mann Educators Company has a long-standing repute for serving the schooling neighborhood and has a big market share within the Ok-12 schooling market.
Click on right here to obtain our most up-to-date Positive Evaluation report on HMN (preview of web page 1 of three proven under):
Dividend Progress Inventory #9: RB World (RBA)
Ritchie Bros. presents end-to-end options for getting and promoting used heavy tools, vehicles, and different property. The corporate’s major promoting channels embrace Ritchie Bros. Auctioneers, the world’s largest industrial auctioneer that includes on-line bidding, IronPlanet, a web-based market with weekly auctions, and IronClad Assurance, which offers tools situation certification. The corporate generates round $1.7 billion in annual revenues, and is predicated in Burnaby, Canada.
Supply: Investor Presentation
On Might tenth, 2023, Ritchie Bros. reported its Q1 outcomes for the interval ending March thirty first, 2023. For the quarter, revenues rose 30.1% year-over-year to $512.4 million. This was as a consequence of whole service revenues and stock gross sales revenues rising by 40% and 13% to $343.6 and $168.8, respectively. Complete income development contains $80 million from the affect of the acquisition of IAA.
Click on right here to obtain our most up-to-date Positive Evaluation report on RB World (preview of web page 1 of three proven under):
Dividend Progress Inventory #8: House Bancshares Inc. (HOMB)
House Bancshares is a financial institution holding firm. Prospects in Arkansas, Florida, Alabama, and New York can entry quite a lot of monetary companies through Centennial Financial institution, the corporate’s major subsidiary. Greater than 300,000 shoppers are served by the corporate’s greater than 222 department websites.
House Bancshares holds a aggressive place within the banking sector and locations a excessive precedence on providing wonderful shopper care and inventive monetary options. The enterprise derives earnings from a number of markets, together with business loans, residential loans, shopper loans, and deposit accounts, and has a market share of about 1% within the US banking business.
Click on right here to obtain our most up-to-date Positive Evaluation report on House Bancshares (HOMB) (preview of web page 1 of three proven under):
Dividend Progress Inventory #7: NextEra Vitality Companions (NEP)
NextEra Vitality Companions was shaped in 2014 as Delaware Restricted Partnership by NextEra Vitality to personal, function, and purchase contracted clear power initiatives with steady, long-term money flows. The corporate’s technique is to capitalize on the power business’s favorable developments in North America of unpolluted power initiatives changing uneconomic initiatives.
NextEra Vitality Companions operates 34 contracted renewable era property consisting of wind and photo voltaic initiatives in 12 states throughout the US. The corporate additionally operates contracted pure gasoline pipelines in Texas which accounts for a few fifth of NextEra Vitality Companions’ earnings.
Supply: Investor Presentation
On April twenty fifth, 2023, NextEra Vitality, Inc. posted its first-quarter monetary outcomes. NextEra Vitality Companions reported Q1 GAAP EPS of -$0.17, lacking expectations by $0.61, whereas income of $301M missed expectations by $54.92M. The corporate expects 12-15% development per yr in restricted accomplice distributions per unit by means of at the very least 2026 and anticipates a This fall 2023 annualized distribution charge of $3.64 to $3.74 per frequent unit.
Click on right here to obtain our most up-to-date Positive Evaluation report on NextEra Companions (NEP) (preview of web page 1 of three proven under):
Dividend Progress Inventory #6: Goal Corp. (TGT)
Goal is a huge low cost retailer. Its enterprise consists of about 1,850 large field shops, which supply normal merchandise and meals, in addition to serving as distribution factors for the corporate’s burgeoning e-commerce enterprise. Goal ought to produce about $110 billion in whole income this yr.
Goal posted first quarter earnings on Might seventeenth, 2023, and outcomes have been higher than anticipated on each the highest andbottom traces. Adjusted earnings-per-share got here to $2.05, which was 29 cents higher than anticipated. Income was upfractionally year-over-year to $25.3 billion, beating estimates by $40 million.
Click on right here to obtain our most up-to-date Positive Evaluation report on Goal (TGT) (preview of web page 1 of three proven under):
Dividend Progress Inventory #5: Magna Worldwide Inc. (MGA)
Magna Worldwide is the biggest automotive provider in North America and the fourth-largest on this planet. Magna has elevated its dividend yearly since 2010.
Magna reported its Q1 2023 outcomes on 05/05/2023. For the quarter, its world mild car manufacturing elevated by 3% vs Q1 2022. As effectively, its gross sales of $10,673 million was a rise of 11% yr over yr. Revenue from operations earlier than earnings taxes fell 35% to $275 million. Consequently, internet earnings declined 43% to $209 million.
Adjusted diluted earnings-per-share (“EPS”) of $1.11 was a decline of 13% yr over yr. This decline is far more palatable than the ends in This fall 2022.
Click on right here to obtain our most up-to-date Positive Evaluation report on Magna Worldwide (MGA) (preview of web page 1 of three proven under):
Dividend Progress Inventory #4: Cigna Group (CI)
Cigna is a number one supplier of insurance coverage services and products. The corporate’s merchandise embrace dental, medical, incapacity and life insurance coverage that it offers by means of employer-sponsored, government-sponsored and particular person protection plans.
Supply: Investor Presentation
On Might fifth, 2023, Cigna reported first quarter outcomes for the interval ending March thirty first, 2023. For the quarter, income grew 5.6% to $46.5 billion, which was $1.05 billion greater than anticipated. Adjusted earnings-per-share of $5.41 in comparison with adjusted earnings-per-share of $6.01 within the prior yr, however was $0.17 above estimates.
Click on right here to obtain our most up-to-date Positive Evaluation report on Cigna (preview of web page 1 of three proven under):
Dividend Progress Inventory #3: Dominos Pizza (DPZ)
Domino’s Pizza is the biggest pizza firm on this planet primarily based on world retail gross sales. The corporate operates greater than 20,000 shops in additional than 90 international locations. It generates practically half of its gross sales within the U.S. whereas 99% of its shops worldwide are owned by impartial franchisees.
In late April, Domino’s reported (4/27/23) monetary outcomes for the primary quarter of fiscal 2023. Its worldwide identical retailer gross sales grew 1.2% over the prior yr’s quarter and its U.S. same-store gross sales grew 3.6%, largely thanks to cost hikes. Earnings-per-share grew 17%, from $2.50 to $2.93, and exceeded the analysts’ consensus by $0.21 thanks to cost hikes, the opening of latest shops and share repurchases.
Click on right here to obtain our most up-to-date Positive Evaluation report on Dominos Pizza (DPZ) (preview of web page 1 of three proven under):
Dividend Progress Inventory #2: Hannon Armstrong Sustainable Infrastructure (HASI)
Hannon Armstrong Sustainable Infrastructure Capital, Inc. is an organization that’s targeted on offering capital for companies within the power effectivity, renewable power, and sustainable infrastructure industries.
Supply. Hannon Armstrong Sustainable Infrastructure Capital presentation
The industries Hannon Armstrong offers capital for are rising, partially as a consequence of huge public investments and incentives by governments and regulators. There thus is ample market development for Hannon Armstrong to focus on. We imagine that Hannon Armstrong will develop its earnings at a low double-digit tempo over the approaching 5 years, which is a powerful development charge for an earnings inventory.
Between its stable dividend yield and excessive earnings development, Hannon Armstrong ought to ship compelling whole returns over the approaching years, making the corporate among the finest dividend development shares.
Click on right here to obtain our most up-to-date Positive Evaluation report on Hannon Armstrong (HASI) (preview of web page 1 of three proven under):
Dividend Progress Inventory #1: Baxter Worldwide (BAX)
Baxter Worldwide develops and sells quite a lot of healthcare merchandise, together with organic merchandise, medical units, and linked care companies units used to watch sufferers. Its merchandise are utilized in hospitals, kidney dialysis facilities, nursing properties, medical doctors’ workplaces, and sufferers at residence below doctor supervision. Baxter has paid dividends to shareholders for 32 consecutive years.
On April twenty seventh, 2023, Baxter Worldwide reported Q1 2023 outcomes for the interval ending March thirty first, 2023. For the quarter, income fell 1.6% to $3.65 billion, however this was $50 million greater than anticipated. Adjusted earnings-per-share of $0.59 in contrast unfavorably to $0.93 within the prior yr, however was $0.06 forward of estimates.
Baxter takes the highest spot among the many greatest dividend development shares as a consequence of its anticipated earnings and dividend development, and enticing anticipated returns.
Click on right here to obtain our most up-to-date Positive Evaluation report on Baxter (BAX) (preview of web page 1 of three proven under):
Ultimate Ideas
Buyers mustn’t ignore one of the best dividend development shares just because many have low present dividend yields. Firms with sturdy enterprise fashions, aggressive benefits, and development potential are enticing no matter their beginning yields.
The most effective dividend development shares unleash the facility of compounding. There are numerous circumstances during which one of the best dividend development shares might produce the next yield on value over time than a inventory with the next present yield however little or no dividend development.
These 12 of one of the best dividend development shares have the potential to lift their dividends by 10% per yr or extra for the foreseeable future, which makes them a beautiful mixture of dividend development and whole returns.
Different Dividend Lists
The Dividend Aristocrats record just isn’t the one technique to shortly display for one of the best dividend development shares. In case you are keen on discovering extra of one of the best dividend development shares, the next Positive Dividend sources will likely be of curiosity to you.
Blue Chip Inventory Investing
Different Positive Dividend Assets
Thanks for studying this text. Please ship any suggestions, corrections, or inquiries to [email protected].
