5 Great Dividend Growth Stocks

Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. In fact, a study by C. Thomas Howard published in Advisor Perspectives found that for every percentage point a stock's yield rises, its annual return increases by 0.22 percentage points if it's a large cap, 0.25 if it's a mid cap, and 0.46 if it's a small cap. Even better, Howard found that dividend-growing stocks outperformed dividend cutters by 10 percentage points per year from 1973 to 2010 and beat both flat- and no-dividend stocks.

And the icing on the cake is that Howard showed that this outperformance came with a third less volatility. Higher returns, less volatility-induced stress, and a steadily growing income stream -- three powerful aspects of dividend growth investing that can help you grow your wealth. With that in mind, here are five elite businesses that are likely to grow their dividends substantially in the years ahead: MasterCard (NYSE: MA), Visa (NYSE: V), Whole Foods Market (NASDAQ: WFM), Starbucks (NASDAQ: SBUX) and Apple (NASDAQ: AAPL). Many investors focus on a stock's current dividend yield. But to create truly long-lasting wealth, most investors would be best served by striving to identify the companies that will grow their dividends substantially in the years ahead.

Source: Motley Fool

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