I’ve been a very happy dividend growth investor for more than a decade. I mean, how could I be anything but happy?

High-quality dividend growth stocks are like the golden geese that lay ever-more golden eggs. The golden geese are world-class businesses selling the products and/or services the world wants and needs.

Not just that. They’re selling more products and/or services at higher prices. And the ever-more golden eggs they lay are the growing dividends they pay out to their shareholders.

I get to sit back, live off of this ever-growing pile of golden eggs, and let the golden geese get bigger and more valuable over time.

Since inflation means things get more expensive over time, you definitely want to make sure your passive dividend income can grow over time. And that’s why dividend growth investing has you covered.

Today, I want to tell you about six dividend growth stocks that just increased their dividends. Ready? Let’s dig in.

The first dividend increase I have to share with you came in from Automatic Data Processing (ADP).

ADP just increased their dividend by 12%.

Isn’t that a beautiful thing? ADP shareholders are now getting 12% more passive dividend income for simply sitting on their hands and not selling stock. If that’s not easy enough for you, I don’t know what is. It’s a classic golden goose consistently laying ever-more golden eggs.

This marks the 46th consecutive year of dividend increases for the human resources software company.

Yep. That easily makes them a Dividend Aristocrat. Their 10-year dividend growth rate is 11.8%, so you can see the outstanding level of consistency playing out here. The yield is 1.8%, so that double-digit dividend growth makes up for a somewhat low starting yield. This is one of those dividend growth stocks that always has a low-ish yield – the stock’s five-year average yield is only 2%. It’s a long-term compounder, not a yield play. And with a payout ratio of 65.8%, the dividend will almost certainly continue to grow at a high rate and compound nicely over the coming years.

This stock is up 40% YTD, and it looks a bit expensive after a big run.

Let me be clear. This is a fantastic dividend growth stock. It’s a great, great business. However, the valuation reflects that – and then some. With a P/E ratio of 37.5 running well ahead of both the broader market’s earnings multiple, as well as the stock’s own five-year average P/E ratio of 31.8, every basic valuation metric indicates overvaluation. I love this name, but I’d wait for a pullback before buying.

The second dividend increase we have to talk about is the one that came from Aflac (AFL).

Aflac just increased their dividend by a whopping 21.2%.

Wow. Just wow. When’s the last time you got a 21.2% pay raise at your day job? Never? Yeah, same here. At least, when I still had a job. Like I keep telling you, dividend growth investing is awesome.

The supplemental insurance company has now increased its dividend for 40 consecutive years.

Another Dividend Aristocrat. Another dividend increase. Just another day in the life of a dividend growth investor. Their 10-year DGR is 7%, so this most recent dividend increase was outsized – a most welcome surprise. But there’s been some recent acceleration in dividend growth. Last year’s dividend increase was nearly 18%. This most recent monster dividend increase has brought the yield up to 2.9%, which is a very healthy yield with this kind of dividend growth. And the payout ratio remains low, at only 25.9%.

Even after the 29% runup this year, I think this stock still looks attractively valued.

It’s a stealth dividend growth stock that always seems to fly under the radar, despite being such an outstanding long-term performer. But that keeps the stock cheap for those who appreciate this name and want to accumulate at a lower valuation. Most basic valuation metrics indicate cheapness, including the P/E ratio of 9.1. And that aforementioned yield of 2.9% is 70 basis points higher than the stock’s own five-year average yield. Take a good look at Aflac, if you haven’t already.

Next up, let’s have a conversation on the dividend increase that was announced by Atmos Energy (ATO).

Atmos Energy just increased their dividend by 8.8%.

More money, less problems. Life is hard enough. Why make investing more complicated than it needs to be? High-quality dividend growth stocks keep working hard so you don’t have to, as this dividend increase goes to show.

This is the 38th consecutive year of dividend increases for the natural gas utility business.

Yep. Yet another Dividend Aristocrat increasing its dividend. Noticing a theme? Dividend Aristocrats are the creme-de-la-creme of dividend growth stocks because of their unparalleled consistency and reliability. If you’re living off of your dividends, that’s exactly what you want. Their 10-year DGR is 5.7%, so this relatively large dividend increase is very nice. Meantime, the stock yields 2.8%. So it’s a solid combination of yield and growth. And the dividend remains covered with a moderate payout ratio of 49.5%, based on midpoint guidance for this fiscal year’s adjusted EPS.

In my view, this stock looks very buyable here.

I actually analyzed and valued this stock in late October, showing why shares could be worth nearly $107/each. The name is up slightly since I put that video out, but shares are currently trading hands for less than $96/each. I see a lot of upside left here. This Dividend Aristocrat is worth your attention, if not your capital.

I now want to highlight the dividend increase that came in from Hormel Foods (HRL).

Hormel just increased their dividend by 6.1%.

Hormel is partly known for their SPAM brand of canned cooked pork. But there’s nothing spammy about this dividend increase. It’s just straight up more passive dividend income for shareholders.

The food company has now increased their dividend for 55 consecutive years.

Is this yet another Dividend Aristocrat? Yes. Yes, it is. These companies continue to sell more stuff, to more people, at higher prices, resulting in their ability to pass along consistent dividend increases to their shareholders. The 10-year DGR is 16%, so this was a relatively small dividend increase. Still, it’s hard to complain about getting more money for doing nothing other than holding stock. The yield of 2.4% is solid, which is actually 50 basis points higher than the stock’s own five-year average yield. And the payout ratio is 62.3%, based on midpoint guidance for this fiscal year’s EPS.

This is a rare stock that’s actually down on the year, and I think the valuation is reasonable.

The valuation might have gotten a bit ahead of itself, which is why the stock has spent much of 2021 in the penalty box. But after cooling down, it looks a lot more appealing. Most basic valuation metrics are pretty close to their respective recent historical averages. Meantime, as I just noted, you’re getting an above-average yield here. I’m not saying that Hormel is a steal. But for a Dividend Aristocrat that is often expensive, the cooling down throughout 2021 has made it worth considering as a long-term investment.

I now have to tell you about the dividend increase that came from Nike (NKE).

Nike just increased their dividend by 10.9%.

This world-class business keeps handing out world-class dividend increases. Stock prices go up and down every day. But dividends from companies like Nike just consistently head higher, year in and year out.

This the 19th consecutive year in which the multinational apparel and footwear company has increased its dividend.

This is the only stock in today’s video that isn’t a Dividend Aristocrat. That said, I’m confident that Nike will be a Dividend Aristocrat in about six years. The 10-year DGR is 13.3%, so a double-digit dividend increase is what Nike shareholders expected… and got. The yield is only 0.7%, which means you really do need double-digit dividend growth in order to make sense of it. But with a low payout ratio of 32.4%, I suspect Nike will be handing out double-digit dividend increases for many years to come.

The stock is up 24% this year, which has led to a rich valuation.

I like Nike very much. It’s one of the biggest, best, and most well-known businesses in the world. It has few chinks in the armor. However, the valuation leaves something to be desired. The P/CF ratio, for example, is 40.9. That’s awfully high in this market… or any market, really. It’s also quite a bit higher than its own five-year average of 34.6. It’s a great business. But I’m not sure it’s a great stock here. If a good pullback comes, though, make sure it’s on your radar.

Last but certainly not least, let’s talk about the dividend increase that was announced by Realty Income (O).

Realty Income just increased their dividend by 4.2%.

When a company has the word “income” in their name, you already know it’s serious about rewarding shareholders with income. And that’s just what Realty Income continues to do. Except they do more than that. They reward their shareholders with ever-more income.

The real estate investment trust has now increased its dividend for 28 consecutive years.

That track record is as long as it could possibly be, dating back to the IPO. I’ve repeatedly called this Dividend Aristocrat one of my favorite dividend growth stocks. And for good reason. It’s so dependable, I can almost set my watch by it – if I actually owned a watch, that is. The 10-year DGR is 4.9%. You can see that this most recent dividend increase is right there. Super consistent. And the stock even yields a very attractive 4.2%. By the way, this big dividend is paid monthly. And the payout ratio, at 82.6%, based on midpoint guidance for this fiscal year’s adjusted FFO/share, is right in line for a REIT like this.

It’s had a comfortable 22% runup this year, but the stock doesn’t look all that expensive to me.

With its acquisition of fellow REIT Vereit completed, an increase in the dividend, and even a boost in this fiscal year’s guidance, the company is firing on all cylinders. Most basic valuation metrics are pretty close to their respective recent historical averages. The P/CF ratio of 20.7 is running ahead of its five-year average of 19.2, but it’s not outrageously so. The Dividend Aristocrat is arguably fairly valued here. And one could do a lot worse than to pay a fair price for a wonderful business. If Realty Income isn’t already in your portfolio, it’d be a good idea to consider changing that at some point in the near future.

— 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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