These 6 Dividend Growth Stocks Are Increasing Their Dividends Yet Again

An object in motion tends to stay in motion. Dividend growth stocks are great examples of this. Because high-quality dividend growth stocks set their dividends in motion.

Upward motion, as in being increased. And then that momentum just continues year in and year out, like clockwork.

If you’re planning to live off of passive dividend income, this is music to your ears.

Because another object in motion – inflation – is definitely showing no signs of ever stopping. And that means things are only going to keep getting more expensive over time.

But I’ve got good news for you. Many of the best dividend growth stocks out there are growing their dividends at rates that exceed inflation.

That slowly improves your purchasing power and puts you in control of your lifestyle. See, dividend increases are at the heart of dividend growth investing.

It’s a major, major part of what makes this strategy so powerful over the long run.

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 we have to talk about is the one that came from Ally Financial (ALLY).

Ally Financial just increased their dividend by 20%.

Inflation? What inflation? When your passive income is growing by 20% year-over-year, inflation is kind of a nothingburger for you.

This is the seventh consecutive year of dividend increases for the financial services company.

Now, that’s a relatively short track record, even for a financial services company. And that’s because Ally wasn’t running the business very well for the first part of the last decade. But they’ve turned the ship around, and the last few years have shown a huge improvement across the board. The five-year dividend growth rate of 40.6% shows them eager to make up for lost time. And this double-digit dividend growth comes attached to a market-beating 2.3% yield. And with a payout ratio of only 14.6%, this dividend growth party might be just getting started.

In a sea of expensive stocks, this one looks reasonably valued.

It’s sensible to at least partially value stocks like this one on a P/B ratio. And I see most financials out there in a range of 1.0 to 2.0. So that’s how I’m looking at it. Ally’s P/B ratio is 1.2, which is on the low end of that range. However, that is above its own five-year average P/B ratio of 0.9. But, you know, the business looks better today than it has over most of the last five years. It’s certainly better than it was at the start of that period. So it’s not crazy to expect a valuation expansion there. The dividend growth track record is relatively short, and I’d like to see more proof that they’ve turned the corner for good, but it’s definitely an interesting name to have on the radar.

Next up, I have to cover the dividend increase that was announced by Apogee Enterprises (APOG).

Apogee just increased their dividend by 10%.

Not as high as what Ally handed out, but this still easily beats the inflation rate. Besides, how many 10% pay raises have you gotten at your job? And how hard did you have to work in order to get them? Well, this one came after a series of similar dividend increases already. And it came without shareholders having to do anything other than, well, hold shares.

This is the 11th consecutive year in which the architectural products and services company has increased its dividend.

This most recent dividend increase was par for the course, as their 10-year dividend growth rate is 9.4%. And with free cash flow covering the dividend more than three times over, the dividend is likely headed even higher from here over the coming years. The only drawback regarding the dividend might be the yield. At just 1.8%, there’s something to be desired there in terms of current income production.

Another thing that leaves something to be desired is the valuation.

After a solid 30% runup over the last year, most basic valuation metrics are now running ahead of their respective recent historical averages. The P/CF ratio of 11.7 is measurably higher than its own five-year average of 9.7. This company is clearly committed to consistently handing out generous dividend increases. But waiting for a more favorable valuation before buying into the business might be smart thing to do.

The third dividend increase I want to highlight is the one that came in from BlackRock (BLK).

BlackRock just increased their dividend by 18.2%.

Yet another dividend increase that’s way higher than the inflation rate. Notice a trend? This is the growth in dividend growth investing. Dividends are cool. But growing dividends? Way, way cooler.

The investment management company has now increased its dividend for 13 consecutive years.

The company’s dividend metrics are impressive. The 10-year dividend growth rate of 11.6% is paired with a current yield of 2.0%. To get a yield-and-growth combination that’s well into the double digits like that? Really nice. And with a payout ratio of 51.9%, which is about as balanced as it gets, BlackRock is positioned to continue rewarding its shareholders with ever-larger dividends.

The stock isn’t cheap, but the quality of the business deserves a high multiple.

BlackRock is the 800-pound gorilla in its industry, managing nearly $10 trillion in assets. There’s none bigger. With great fundamentals pretty much right across the board, there’s really nothing to complain about in terms of quality. Now, the stock isn’t cheap. But I don’t think it’s all that expensive, either. The P/E ratio of 22.6 is running ahead of its five-year average of 19.6. Might it make sense to wait for a pullback here? Sure. But would you stand to do well over the next 10-20 years by getting in now? I think you would. I’d argue that competitor T. Rowe Price Group (TROW) is the better deal right now when you size them up, but BlackRock is a monster.

I now want to give you the scoop on the dividend increase that came courtesy of Jefferies Financial Group (JEF).

Jeffries just increased their dividend by 20%.

Another massive dividend increase. How can you not love this stuff? I mean, this is what makes dividend growth investing so fantastic. You wake up, get paid. You wake up, get paid even more. It’s beautiful.

This marks the sixth consecutive year of dividend increases for the financial services company.

You know, this is an under-the-radar dividend growth stock. But it’s coming on strong. The five-year dividend growth rate is 29.2%. That’s great. And with a yield of 3.2%, you don’t have to sacrifice income in order to gain that kind of dividend growth. Plus, the payout ratio is at only 20%, even after this monster dividend increase.

The valuation would seem to further indicate just how far under the radar this name is flying.

I don’t see anything expensive here. If anything, most basic valuation metrics are showing cheapness. Now, the last year has been incredible for the business, to the point of being anomalous. And so it’s hard to draw too many conclusions on that. But check this out. The P/E ratio is only 6.3 right now. Even if earnings suddenly fell in half, the P/E ratio would still be under 13. Financial results are a little lumpy, and the dividend growth track record is short, but this has the makings of a real gem. Take a look at it, if you haven’t already.

Next up, let’s talk about the dividend increase that was handed out by Lakeland Financial (LKFN).

Lakeland Financial just increased their dividend by 17.6%.

Another blowout dividend increase. Inflation is getting a lot of airtime. And, yeah, if you aren’t invested in businesses, that’s a problem for you. But when you’re a dividend growth investor invested in productive businesses – real assets – that have the ability to consistently grow, you’re sitting pretty.

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

The 10-year dividend growth rate is 12.6%, so double-digit dividend increases are nothing new for this bank. With the payout ratio still low, at 42.6%, this dividend is secure and likely headed higher for years to come. On the other hand, the stock only yields 1.9%. So it’s not a big income producer. Instead, it’s just a steady compounder – the stock has compounded at an annual rate of more than 20% over the last decade.

The problem? Some of that great performance might have come at the expense of multiple expansion.

Indeed, most basic valuation metrics are running well ahead of their respective recent historical averages. The P/B ratio, for instance, is 3.1. That’s really high. Now, the stock has typically commanded a heavy premium – its five-year average P/B ratio is 2.3. But we’re materially higher than that. If you pull up the last 10 years of financial statements for this bank, you’ll see that they grow the top line and bottom line in this incredibly smooth, secular manner. I don’t think there’s been a single year in the last 10 in which they’ve suffered year-over-year declines in the business. But the valuation seems to be pricing all of that in – and then some. If a pullback strikes this small bank, though, it’d be worth a really good look.

Last but not least, let’s talk about the dividend increase that was announced by STAG Industrial (STAG).

STAG Industrial just increased their dividend by 0.7%.

I know. I know. 0.7%? After all of these massive dividend increases that we’ve been talking about? What gives? Well, I’ll tell you. STAG tends to increase its dividend multiple times per year.

This is the 11th consecutive year in which the industrial real estate investment trust has increased its dividend.

The dividend growth has, admittedly, been somewhat uneven here. The 10-year dividend growth rate of 12% makes you perk right up. But then the last few years have produced just low-single-digit dividend growth. On the other hand, the stock yields a solid 3.4%. And that dividend is paid monthly. So there’s good income to be had here. And with the new dividend rate only taking up 71.2% of the company’s core FFO/share, per recent guidance at the midpoint, this monthly dividend is in no danger of shutting off.

The stock has been a monster, up 42% over the last year. But that has pushed the valuation up.

I really like this REIT. In fact, I like industrial REITs in general. With e-commerce making logistics more important and valuable than ever before, it’s a great space to be in. However, there’s been so much enthusiasm in this space generally, and this stock specifically, that valuations have gotten heavy. The P/CF ratio of 21.3 is somewhat rich for this name, as its five-year P/CF ratio is only 15.7. And its five-year average yield is 4.6%. So the current 3.4% yield doesn’t look nearly as attractive in that light. A good-sized pullback would make this name much more compelling. Until then, it’s one to have on the watchlist.

— 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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