Dividend growth investing is a no-brainer investment strategy. You want your wealth to exponentially grow?
Check.
Dividend growth stocks are some of the very best long-term wealth growers in all of the stock market. You want the easiest form of passive income?
Check.
There’s nothing out there that offers the passivity of dividends. You want your passive dividend income to grow faster than inflation?
Check.
High-quality dividend growth stocks are typically increasing their dividends at rates greatly exceeding inflation. This allows you to not only keep up with the rising costs of life but also actually outpace those rising costs. This grows your purchasing power over time and creates a larger gap between your passive dividend income and expenses.
Today, I’m going to tell you about three high-quality dividend growth stocks that just increased their dividends. This is dividend growth investing in action.
Ready? Let’s dig in.
Recent Dividend Booster #1: Johnson & Johnson (JNJ)
The first dividend increase I want to tell you about came from Johnson & Johnson (JNJ). Johnson & Johnson just increased their dividend by 5%.
This is one of the most reliable dividend growth stocks on the planet. How reliable? The healthcare giant has increased their dividend for 59 consecutive years.
That’s almost two of my lifetimes. If you plan to live off of passive dividend income, there’s nothing more important than reliability. Because those bills you have? Yeah, they’re very reliable. Johnson & Johnson’s dividend flows and grows like clockwork. And with a 10-year dividend growth rate of 6.6%, you’re more than keeping up with inflation here.
This is the kind of foundational stock you can build an entire portfolio on.
With a well-covered yield of 2.6% and a P/CF ratio of 18.6, this stock is not all that far off from its recent historical averages in terms of valuation. Yet it’s one of the highest-quality dividend growth stocks I know of. That’s just part of why it’s one of my top five stocks for 2021.
Recent Dividend Booster #2: Travelers Companies (TRV)
The next dividend increase came courtesy of Travelers Companies (TRV). Travelers just gave their shareholders a nice passive income boost via their 3.5% dividend increase.
Travelers is a business that flies way under the radar, but they’ve been quietly growing wealth and passive income for shareholders for many, many years.
This marks the 17th consecutive year of dividend increases for the insurance company.
While this dividend increase wasn’t as large as I was expecting or shareholders have become accustomed to, I can forgive any business for being cautious right now. Travelers is a well-run business. And as an insurance company, they’re served well by erring on the side of caution. Meanwhile, with a payout ratio of only 31.8%, this is an extremely safe dividend. And I suspect they’ll get back to growing their dividend to a level closer to their 10-year dividend growth rate of 9.1% soon.
This stock remains surprisingly affordable in an expensive stock market.
The P/E ratio is just over 14. And the yield of 2.3% is slightly above its five-year average of 2.2%. At worst, it’s fairly valued. When you measure that against a lot of other stocks out there, I think there’s a lot to like on a relative basis.
Recent Dividend Booster #3: Parker-Hannifin (PH)
Last but not least, let’s talk about the massive dividend increase that came from Parker-Hannifin (PH). Parker-Hannifin increased their dividend by a whopping 17%.
How about that for keeping up with inflation? Longtime Parker-Hannifin shareholders have become used to this company delivering year after year.
The motion and control technologies company has increased its dividend for 65 consecutive years.
We’re more than six decades into dividend growth, yet the company hands out this monster dividend increase? That just goes to show you how some of these blue-chip type of stocks are really just getting started in many ways. This dividend is showing some growth acceleration off of its 10-year dividend growth rate of 12.6%. That kind of growth makes up for the stock’s low yield of 1.3%.
The only bummer? The stock isn’t cheap.
It’s sporting a P/E ratio of 29 after a blistering run – it’s up almost 140% over the last year. But you get what you pay for. If you want quality, you typically have to pay up for it. If this stock pulls back in a meaningful way at any point, definitely have it on your list. This is the kind of business that’ll just quietly and exponentially increase your wealth and passive income while you sleep.
— Jason Fieber
P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.
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