I’m not sure if they were still filled with merchandise selling for 5 or 10 cents by then, but I’m old enough to remember the local retailers from my childhood that we referred to as dime stores. While the five and dimes of old were stuffed with inexpensive common goods, here I want to highlight some dividend-payers that are actually somewhat rare. These companies:
• Raised their dividend payout by 10% or more in each of the past five calendar years;
• Have a Morningstar Economic Moat Rating of narrow or wide;
• Have a low or medium uncertainty rating from Morningstar analysts;
• Yield at least 1%.
A Select List
Keep in mind that this screen will not capture every company with a five-year streak of 10% dividend increases, as it’s restricted to the companies that Morningstar equity analysts cover. Just 13 firms passed the screen and are listed below in Exhibit 1. The average yield is just 1.8%. While it might seem surprising that the list isn’t full of higher-yielding stocks, this is expected. In many cases, higher-yielding stocks are the ones that are already paying out a significant portion of their earnings each year as dividends. Hence, there’s generally not enough room for these higher yielders to provide double-digit dividend increases for five consecutive years. Also, the annual percentage increases listed here are based on total dividends paid for each calendar year, not the percentage increases in the dividend rate from the previous one. While in some cases these two percentages would match, they also can differ, depending on the timing of a company’s increases. Further, when compiling the lists, I subtracted any one-time special dividends from the year-over-year calculations, as I don’t think it’s fair to penalize a company for a situation where a special dividend results in a decrease in the total payout for the following year, despite an increase in the regular dividend rate.
I did this same exercise a year ago, which generated a list of 16 names, eight of which didn’t make the cut this time. Analog Devices ADI, Goldman Sachs GS, Home Depot HD, Nike NKE, and Tractor Supply TSCO all provided reasonable increases in total dividends paid in 2024 but fell short of the 10% hurdle. Kroger KR would have made the list, but its moat rating was downgraded to none from narrow during 2024. NXP Semiconductors NXPI held its dividend flat in 2024. And American Tower AMT ended its practice of increasing its dividend payment each quarter. Its first dividend of 2024 was lower than its final dividend payment of 2023; it paid that rate for the entire year, though the total dividend paid in 2024 was slightly more than that paid in 2023. Five names are new to the list this year: Accenture ACN, Elevance Health ELV, MSCI MSCI, SBA Communications SBAC, and Zoetis ZTS.
The Honorable Mentions
Exhibit 2 lists the 22 stocks that fell short of the main list by one or two factors, whether it was a single instance of year-over-year dividend growth of less than 10% (though negative dividend growth was an automatic disqualification), the lack of a narrow or wide moat rating, or an uncertainty rating of high or very high. Eight of the names from last year’s list appear here: American Tower, Analog Devices, Goldman Sachs, Home Depot, Kroger, Nike, NXP, and Tractor Supply. This list has a higher average yield of 2.4%.
Looking Ahead
NextEra Energy NEE has already declared a 10% dividend increase for 2025, and the size of Snap-on’s SNA dividend increase effective with its final payout of 2024 should result in a 10.9% year-over-year increase, even without a corresponding raise for its last payout of 2025.
However, keep in mind that any company with a five-year streak of raises of 10% or more has grown its dividend rate by at least 61%. This doesn’t preclude continued increases of that magnitude, but if payout ratios are high enough, dividend growth may be likely to slow.
What Does It Mean?
Streaks of large dividend increases are not, by themselves, a buy signal for any dividend-paying stock. The same can be said for stocks with dividend aristocrat status. Potential investors should consider current yields, economic moats, valuations (which were not a consideration for this exercise), and the prospects for future dividend growth.
Still, the streaks are tangible evidence that these companies 1) are growing their earnings at rates sufficient to support such dividend increases and 2) have management teams that are clearly interested in increasing the amount of cash they return to shareholders via dividends. The fact that we see multiple instances of year-over-year increases of 10% for stocks in both exhibits indicates that some management teams are making capital-allocation decisions with that specific hurdle in mind.
A version of this article first appeared in the March 2025 issue of Morningstar DividendInvestor. Download a complimentary copy of DividendInvestor by visiting this website.
The author or authors do own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
