These 5 Dividend Growth Stocks Have Made Investors Very Wealthy Over the Last Decade

Get-rich-quick schemes are everywhere. Always have been. Always will be. But here’s the truth: Get-rich-quick schemes are actually fantastic at making your poor fast.

If you can instead be patient and invest in great business, you can almost guarantee yourself life-changing wealth over time. You simply have to be willing to accept reality, where you become wealthy at a reasonable pace.

I’m a great example of this. I grew up on welfare in Detroit. My dad split when I was eight. My mom split when I was 11.

Dropped out of college, lost my job during the financial crisis, and stayed poor up until my late 20s. But by taking control of my life, accepting personal accountability for my actions, living below my means, and investing in high-quality dividend growth stocks, I became financially independent in my early 30s.

High-quality dividend growth stocks represent equity in world-class business that pay reliable, rising dividends to their shareholders. These are the companies that provide the products and/or services that, figuratively speaking, make our world go round.

They’re cash machines. They can be your cash machines.

I now control a very large portfolio of investments in high-quality businesses paying me enough safe, growing dividend income to more than cover my bills. It’s a pretty good life, guys. And I didn’t have to speculate on total nonsense to get here.

People think you need to gamble to make real money. That’s just not true. You can become very wealthy over time by investing even just a small amount of money into truly great businesses.

Today, I want to tell you about 5 dividend growth stocks that, together, 10x’d invested capital over only 10 years.

Ready? Let’s dig in.

The first dividend growth stock I want to highlight today is Albemarle (ALB).

Albemarle is a specialty chemicals manufacturing company. Diversified chemical companies can be great long-term investments. That’s because a lot of the everyday products we all use require basic chemicals in order to be manufactured. You’re not going to think about these chemicals when you’re using the end products, but that makes them no less important or necessary.

Albemarle took a core chemical business that was already great and then bolted on a significant lithium business after acquiring Rockwood Holdings, Inc. in 2015. Albemarle was growing at a nice clip before. But it’s now positioned to grow its revenue, profit, and dividend even faster, due to the extreme and expanding demand for lithium.

Albemarle has increased its dividend for 28 consecutive years.  This is a vaunted Dividend Aristocrat. And Albemarle was able to build its Dividend Aristocrat status mostly on the back of the core chemical business. Becoming one of the world’s largest lithium producers on top of that? Awesome.

The company’s 10-year DGR is 7.4%. To be honest, that’s not all that great when you consider the stock’s yield of 0.5%. I’d usually want to see a much higher dividend growth rate to compensate for the low yield. But Albemarle is investing heavily into extra capacity on the lithium side. They’re playing the long game. And that’s exactly what long-term investors should be doing, too.

By the way, the stock’s yield is low, in part, because the stock has been such a monster, which is why I’m discussing it today. Chasing after 10% sucker yields from low-quality businesses, seeing your wealth slowly melt, and giving up 1,000% gains? Not smart. Like I’ve said a million times, don’t chase yield.

By the way, the payout ratio here is only 7.6%, based on this year’s adjusted EPS guidance. That’s ridiculously low, which gives Albemarle the flexibility to pay and grow the dividend while investing in capacity.

A $1,000 investment into Albemarle 10 years ago would now be worth $6,000. This is all assuming reinvested dividends along the way, which is about as easy as hitting a single button. The stock has compounded at an annual rate of almost 20% over the last decade, which runs circles around the S&P 500 and almost everything else out there.

The crazy thing is, even 10 years ago, it was clear that Albemarle was on its way to becoming a Dividend Aristocrat. So you didn’t have to make some crazy bet here by buying shares in Albemarle, yet you still 6x’d your money in a pretty short period of time. This is the power of dividend growth investing over the long term.

The second dividend growth stock I have to bring up today is Broadcom (AVGO).

Broadcom is a leading designer, developer, and supplier of analog and digital semiconductor devices. You want to grow your money? You have to be in tech. After all, our world is increasingly becoming reliant on technology.

From smartphones to automation, tech is the future. However, there’s a big caveat here – you have to be in quality tech. I’m not talking about the low-quality, unprofitable, hopes-and-dreams, “innovation” tech. I’m talking about real companies making ever-more real money by selling ever-more real products and services. Broadcom is a perfect example of this, which sets them up to flourish and continue producing ever-more revenue and profit, and that should translate to an ever-higher dividend.

Broadcom has increased its dividend for 13 consecutive years. This company doesn’t have the longest dividend growth track record out there. But what a blazing start it’s off to. The 10-year DGR is 40.2%. Even the most recent dividend increase was 13.9%. Broadcom hands out double-digit dividend increases to their shareholders like people hand out candy to kids for Halloween.

What makes Broadcom even more special is the fact that you also get a pretty healthy yield to go along with that huge dividend growth. The stock yields 3.2%. That’s a rare combination of yield and growth. And with the payout ratio sitting at 46.9%, based on TTM adjusted EPS, the dividend appears to be safe and poised for much more growth ahead.

A $1,000 investment into Broadcom 10 years ago would now be worth $18,500. How about that? You nearly 20x your money on a great business. Didn’t have to play the lottery. Didn’t have to chase some online Ponzi scheme. None of the nonsense. Just put capital to work with a high-quality company paying safe, growing dividends, reinvest those safe, growing dividends, and let the magic of compounding play out. That’s it. It really is that simple.

Of course, simple doesn’t necessarily mean easy. And you do have to be patient here. But high-quality dividend growth stocks like Broadcom can make you wealthy over time.

The third dividend growth stock we have to cover today is Cintas Corporation (CTAS). Cintas provides a range of products and services to businesses, including uniforms and various supplies.

Cintas is one of those companies that flies way under the radar, but many of us have probably touched their products without even knowing it. I can tell you that I used to be a service advisor for a car dealership. That was my old day job. I did it for about eight years of my life. And guess what? Cintas provided the uniform I used to wear 5-6 days per week.

Cintas is providing something that is often necessary for the workplace, yet its low cost makes it something easy to accept for employers. And, you know, annual increases in that relatively small cost base just aren’t a big deal. That’s why Cintas has been able to provide blockbuster growth across its revenue, profit, and dividend for years.

Cintas has increased its dividend for 39 consecutive years. Yep. Another Dividend Aristocrat here. Some investors, especially new, naive investors, think Dividend Aristocrats are these boring investments that don’t make any real money. But that’s actually the opposite of what’s true.

It takes a very special kind of business to be able to pay and increase a dividend for 25+ straight years. The 10-year DGR is 22.2%. So for anyone who thinks dividend growth stocks don’t grow, even though the G in DGI literally stands for “growth”, 22.2% ought to change your mind on that. And a low payout ratio of 36.9% means we likely have a lot more double-digit dividend growth ahead of us. Now, the stock does yield only 1.1%. So this is more of a compounder than an income play, but what a compounder it’s been.

A $1,000 investment into Cintas 10 years ago would now be worth $11,700. Wow. Cintas has compounded money at an annual rate of almost 28% over the last decade, which is just incredible. For perspective on just how incredible that is, Warren Buffett’s long-term CAGR is right about 20%.

If you can more than 10x your money in a decade, you’re doing really, really well, and you’re well on your way to becoming a very wealthy person. So before you think you need to chase hollow shiny objects where there’s no there there, consider investing in world-class businesses compounding at high rates and paying safe, growing dividends along the way. It’s a much better way to actually get rich and sleep well at night.

The fourth dividend growth stock I’ll bring to your attention today is Domino’s Pizza (DPZ).

Domino’s Pizza is a multinational pizza restaurant chain. This is the world’s largest pizza company. And what a great space to be large in. After all, how timeless is pizza? Is there any other food that is as enduring as pizza? Is there any other food that travels as well as pizza?

I can tell you firsthand, living in Thailand for quite a few years, that pizza is popular in Asia. It’s something that almost all people love. The demand runway for pizza is basically limitless, which is what bodes so well for Domino’s and its ability to continue driving its revenue, profit, and dividend higher.

Domino’s has increased its dividend for 10 consecutive years. Now, this dividend growth stock is more growth than dividend, which really makes it more suitable for younger dividend growth investors who have the time and patience to let that compounding process play out.

We can see this dynamic play out in the five-year dividend growth rate of 19.2%. And the payout ratio sitting at only 35.6%, even after all of those big dividend increases. What you have to compromise on here is yield. The stock’s 1.2% yield doesn’t make it a great candidate for someone, say, in their 50s and just starting out with investing. But investors who have held this stock for a number of years have seen those once-small dividend payments balloon into something much larger. And that’s what long-term dividend growth investing is all about. What else is it about? How about market-beating total return?

A $1,000 investment into Domino’s 10 years ago would now be worth $10,000. I just love this. It’s a business model so simple and timeless, even children can understand it. Yet that didn’t stop anyone from investing a decade ago and 10x’ing their money in the process. Investing need not be complicated.

In fact, the more complicated something is, the less likely I am to invest in it. Will Domino’s 10x shareholders’ money over the next decade? Well, we’ll only know 10 years from now whether or not that happened. But I think the business has a very good shot at doing that. Meanwhile, those same shareholders are collecting a fast-growing dividend while they wait and see. Not a bad way to go.

Last but not least, let’s quickly talk about Microsoft Corp. (MSFT).

Microsoft is a multinational diversified technology corporation. Microsoft is truly a behemoth. The company’s market cap is nearly $2 trillion. This isn’t the same Microsoft that Bill Gates originally ran. It’s way beyond Windows now.

In fact, the company’s biggest business segment is Intelligent Cloud, which houses its crown jewel: Azure. When you go beyond cloud computing and Windows, Microsoft is also in networking, gaming, devices, search, etc.

Like I said earlier, if you want to grow your money, you have to be in tech. And you’d have a hard time finding a better way to do that than with Microsoft, which is a company that continues to grow its revenue, profit, and dividend like clockwork.

Microsoft has increased its dividend for 20 consecutive years. High-yield junk stocks might get YouTube views, but here’s the secret: High-quality businesses producing consistent growth across all elements of operations, which leads to consistent dividend growth, are the businesses that actually build serious passive income and wealth over time. But you need to have patience.

The stock’s current yield of 1.1% and 10-year DGR of 12% is a perfect example. Those focusing on the former are missing the power of the latter, just like those focusing on today are missing out on the potential of tomorrow. Since Microsoft’s payout ratio is only 29.3%, I foresee plenty of sunny tomorrows when it comes to the dividend and the growth of it.

A $1,000 investment into Microsoft 10 years ago would now be worth $11,000. Yet another 10-bagger, guys. Microsoft has compounded at a 27% annual rate over the last 10 years. It’s difficult to overstate how incredible that is. And you don’t need an entire portfolio of businesses doing this.

Even if you only have one or two Microsoft-type of businesses in a portfolio, you’re almost certainly going to become very wealthy over time. The five names discussed today created a 10×10 – 10 times money after 10 years. If we sum things up, $5,000 invested evenly 10 years ago across these five businesses – Albemarle, Broadcom, Cintas, Domino’s, and Microsoft – would now be worth a combined $57,200. You would have more than 10x’d your money. And you would have done it in a low-risk way, all while collecting safe, growing dividends along the way.

Getting paid ever-more passive income makes it much easier to stay patient, delay gratification, and let that compounding process play out for you. Keep in mind, compounding doesn’t have an expiration date. If you 10x that $57,200 again, you end up with more than half a million dollars!

So on and so forth. Forget about the get-rich-quick schemes where you’re almost guaranteed to lose your money. Let world-class businesses send you safe, growing dividends while they make you wealthy over time.

— Jason Fieber