Dividend growth investing is a fantastic long-term investment strategy. It practically sells itself.

After all, we’re talking about owning stock in world-class enterprises that pay their shareholders reliable, rising dividends. What’s not to love about that? What is there to complain about?

Collecting totally passive dividend income is already pretty awesome. But dividend growth investing kicks it up a notch.

Because we’re talking about collecting totally passive dividend income that’s increasing… all by itself. That’s right.

Dividend growth investing is all about investing in businesses that are routinely increasing their dividends. That means passive dividend income that’s growing, like clockwork, year in and year out.

Which certainly helps in a world where inflation just about guarantees higher prices on everything over time. Today, I want to tell you about three dividend growth stocks that just increased their dividends. Ready? Let’s dig in.

Dividend Increase Stock #1: Casey’s General Stores (CASY)

Casey’s just increased their dividend by 2.9%.

I know. 2.9% isn’t much. Nothing to write home about. Or is it? Let’s just keep some perspective here. This is more money. Not only that, it’s more money for doing absolutely nothing other than holding stock in a company. That’s the beauty of dividend growth investing. Hold shares. Get paid. Then get pay raises, which results in you getting paid even more. Gotta love it.

This is the 22nd consecutive year of dividend increases for the convenience store company.

This latest dividend increase is a continuation of a dividend deceleration theme for Casey’s. Their 10-year DGR is 12.2%, and their five-year DGR is 8.8%. Then there’s this dividend increase, at near 3%. The deceleration in dividend growth isn’t something I’m very keen to see. Especially since the stock only yields 0.7%. On the other hand, this dividend is extremely secure. The payout ratio is only 16.8%. Meanwhile, this stock has been a very strong long-term performer.

This stock is up 320% over the last 10 years.

Long-term shareholders should be highly pleased with their investment in Casey’s. They’ve done well. That said, I’d personally like to see a lower valuation and higher yield here in order to compensate for the recent slowdown in growth. Most basic valuation metrics, like the 23.3 P/E ratio, are, admittedly, roughly in line with their recent historical averages. It’s just that a 10% or so pullback would make more sense of the numbers. But if a pullback does come, this is an interesting dividend growth stock to consider.

Dividend Increase Stock #2: STORE Capital (STOR)

STORE Capital just increased their dividend by 6.9%.

Yep. Almost 7% more completely passive dividend income. Go to bed. Then wake up the next day to more money than you were getting paid before. It just doesn’t get any better or easier than that.

This marks the seventh consecutive year of dividend increases for the real estate investment trust.

The triple net retail REIT continues to deliver. This dividend increase is exactly what I was expecting from them. Their five-year DGR is 9.8%. But I think mid-to-high-single-digit growth is an accurate expectation here. And that’s plenty when you consider that the stock also yields 4.1%. I mean, you’re talking about a yield-and-growth combination that’s well into the double digits here. And the payout ratio is manageable – at 79.8%, based on midpoint AFFO/share guidance for this fiscal year.

This is one of my favorite REITs.

I’ve highlighted this name a number of times on the channel. They continue to steadily grow the business and the dividend, all while offering a market-smashing yield. And the valuation isn’t unreasonable at all. Based on that aforementioned guidance, we’re talking about a forward P/AFFO ratio of 17.8. Major competitors to STORE have cash flow multiples at well over 20. This is the only REIT in the $300 billion common stock portfolio managed by Warren Buffett within his conglomerate, Berkshire Hathaway. If you want to invest alongside Buffett, this REIT should definitely be on your radar, if not in your portfolio.

Dividend Increase Stock #3: Fifth Third Bancorp (FITB)

Fifth Third just increased their dividend by 11.1%.

A double-digit boost in your passive dividend income for sitting on your hands and simply not selling shares. That’s so easy, even I can do it. How easy or common is it to get a double-digit pay raise from your boss at your job? I’d say not easy and uncommon. But as a shareholder? Both easy and common.

The regional bank has now increased its dividend for 11 consecutive years.

Banks have had a tough go of it over the last decade. Tons of regulation, low interest rates, trying to grow out of the Great Recession, and then the pandemic. They can’t catch a break. Yet Fifth Third has increased its dividend for 11 consecutive years anyway. Their five-year DGR is 15.1%, so it’s not a surprise to get a double-digit dividend increase right now. And while this increase was already “pre-announced” a while back, they’ve made it official with the actual dividend declaration. With the payout ratio at only 35.0%, the dividend is in a position to keep growing nicely for years to come. Plus, you’re getting a market-beating yield of 3.0% while that growth unfolds.

This stock is up 45% YTD, but I think the valuation remains attractive.

Bank stocks were so beat up last year, that even big runs this year have left many of them still looking somewhat inexpensive. I actually highlighted this stock with a full analysis and valuation video back in early August, concluding that shares have an estimated intrinsic value of slightly under $42/share. With shares currently trading hands for about $39.50/each, and with the P/E ratio at just 11.5, I see a lot of potential upside here.

— 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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