In an article yesterday we looked at the top 10 US companies based on the dividends paid. More important than the dividends paid is the annual dividend growth rate. This rate is especially important over many years due to the effect of compounding in boosting the investment returns assuming an investor reinvests dividends.
The following table shows the top firms with the Highest Growth in Annual Dividends per Share over 10 years according to a research report by FactSet published last month. Companies with a starting or current dividend yield of less than 2% were excluded in this list. The growth rate calculated is that of compound annual growth rates based on annual dividends per share.
| S.No. | Company | Ticker | Sector | 10-Yr Annual DPS Growth | 10-Yr Annual EPS Growth | 10-Yr Annualized Return |
|---|---|---|---|---|---|---|
| 1 | Diamond Offshore Drilling | DO | Energy | 23.10% | 9.30% | |
| 2 | Occidental Petroleum | OXY | Energy | 17.30% | 13.50% | 16.30% |
| 3 | ONEOK, Inc. | OKE | Energy | 15.70% | 1.70% | 24.70% |
| 4 | Wisconsin Energy | WEC | Utilities | 13.70% | 9.30% | 13.80% |
| 5 | Mattel, Inc. | MAT | Consumer Discretionary | 13.70% | 7.80% | 10.80% |
| 6 | ConocoPhillips | COP | Energy | 12.70% | 8.20% | 13.90% |
| 7 | Public Storage | PSA | REITs | 11.10% | 14.40% | 16.10% |
| 8 | General Mills, Inc. | GIS | Consumer Staples | 10.90% | 7.50% | 11.70% |
| 9 | PACCAR Inc | PCAR | Industrials | 10.70% | 9.50% | 11.40% |
| 10 | Raytheon Company | RTN | Industrials | 10.60% | 21.50% | 13.80% |
| S&P 500 | - | 6.00% | 6.30% | 5.30% |
Source: Dividend Quarterly, September 15, 2014, FactSet
All the companies noted above have annual dividend per share(DPS) growth rates exceeding that of the S&P 500’s 6.0%. Energy firms dominate the above list and financials did not make the cut since many of them cut or suspended dividends during the global financial crisis. Wisconsin Energy Corporation(WEC) is a multi-utility operating in the electric and natural gas industries. Long-term investors can consider ConocoPhillips, Raytheon Company and General Mills adding to their portfolios and avoid companies such as Mattel in the consumer discretionary sector.
Note: Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.
Disclosure: Long GIS
