These 3 Dividend Growth Stocks Are Growing Their Dividends at a Blazing Pace

Dividend growth investing. It really is one of the very best long-term investment strategies. That’s because it basically funnels you right into some of the world’s best businesses.

After all, you can’t pay out ever-larger dividends without producing ever-more profit. And you can’t produce ever-more profit without being a world-class enterprise.

But some investors believe that dividend growth stocks are always limited to mature, slow-growth businesses. I’ve done so many articles and videos going over why that’s simply not true. And I’m back at it again today.

Today, I want to tell you about three dividend growth stocks that have increased their dividends at rates approaching, or even exceeding, 50% annually over the last 10 years. Ready? Let’s dig in.

Gangbuster #1 growing its dividend at a blazing pace is Broadcom (AVGO)

Broadcom is a global semiconductor company with a market cap of $195 billion.

Broadcom has been a dividend growth monster. I don’t know of any dividend growth stock that has increased its dividend at a higher rate over the last decade. How high has this growth rate been?

Their 10-year dividend growth rate is an astounding 69.1%.

Yep. Their quarterly dividend in the summer of 2011 was $0.11 per share. That quarterly dividend is now at $3.60/share. That’s an increase of more than 30 times. Next time you hear someone talk about how dividend growth stocks don’t grow, just mention Broadcom. Case closed. They’ve increased their dividend for 11 consecutive years. And with the dividend only accounting for about half of free cash flow, you know there’s more to come.

Broadcom’s valuation looks slightly stretched to me, but a pullback could be just the opening you need to invest.

Even with all of that growth, the stock still yields 3%. Where else are you going to find a 3% yield with a dividend growth rate that high? Through M&A activity, revenue is up tenfold over the last decade. Free cash flow is up almost twentyfold. The current P/CF ratio of 15.3 is slightly higher than its own five-year average of 15.6. But a small pullback might be all you need to really consider grabbing shares.

Gangbuster #2 growing its dividend at an incredible rate is CTO Realty Growth (CTO)

CTO Realty is a net lease real estate investment trust with a market cap of $322 million.

This REIT is a lot smaller than the REITs I typically focus on. But its small size lends itself to the potential for an outsized growth rate. And that’s exactly what this company has delivered.

Their 10-year dividend growth rate is a monstrous 47.1%.

Not as high as Broadcom’s, sure. But against almost any other stock, that’s unreal. And get this. The stock yields 7.4%. If anyone know of a higher yield and a higher dividend growth rate, paired together like this, I’d love to hear about it. Because I’m not aware of anything quite like it. They’ve increased their dividend for eight consecutive years, but do be aware that the payout ratio is dangerously high. They most recently reported AFFO/share of $1.07 for Q2 2021, but the quarterly dividend is $1.00 per share. By the way, that $1.00 quarterly dividend – $4.00/year – is up 25 times compared to the $0.02/share semi-annual dividend they were paying back in 2012.

Even after a 30% runup this year, the stock doesn’t look that expensive.

This was nearly a $70 stock before the pandemic. At less than $55/share now, it’s yet to fully recover. The P/CF ratio of 11.3 is precisely in line with its five-year average. Now, I view this as rather speculative in nature. It’s a small cap stock with a high yield and high payout ratio. But revenue is up fourfold over the last 10 years. And they’ve recovered nicely off of last year, with AFFO/share for the most recent quarter up almost 1,000% YOY. It’s definitely interesting.

Gangbuster #3 growing its dividend at a blazing pace is Timberland Bancorp (TSBK)

Timberland Bancorp is a community bank with a market cap of $239 million.

Unless you live in Western Washington, which is where this bank operates, you’ve probably never heard of Timberland Bancorp. But don’t let that impede your interest, because I’ve got something that’ll grab your attention.

Their 10-year dividend growth rate is a colossal 55%.

I’ve got your attention now, right? On top of that impressive growth, the stock also yields 2.9%. These stocks are pretty unique here in terms of not only their huge dividend growth rates but also the fairly attractive yields they offer. What’s perhaps even better in the case of this particular stock here is the payout ratio – at only 25.4%, there’s plenty of room for more dividend increases. Another special thing about Timberland Bancorp? They routinely pay special dividends, like the $0.10/share special dividend that came along with the normal $0.21/share quarterly dividend they declared for Q3 of this year. They’re going on 10 consecutive years of dividend increases, but they’re really just getting started.

This stock is up almost 18% YTD, but the valuation remains very reasonable.

Now, this is a community bank with a market cap of less than $300 million. There’s more risk here than when you’re talking about some blue-chip large cap stock. But this has been a performer. The stock is up almost 500% over the last 10 years. The P/E ratio is under 9. The P/B ratio of 1.2 is on the low end for a bank, and it’s also lower than the stock’s own five-year average P/B ratio of 1.5. This is a super interesting small cap stock with a very high dividend growth rate, attractive yield, and even special dividends.

— 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.