Lowe’s raised its dividend at an annual charge of about 17% from 2015 via 2020. Here, a Lowe’s in Farmingdale, N.Y., final yr.
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The S&P 500 Dividend Aristocrats are sometimes held up as exemplars of dividend consistency. The 65 members of this group have earned that repute by paying out a better dividend for at the least 25 straight years.
Some of those firms are extra like turtles than hares, nevertheless, in relation to dividend development. Case in level: AT&T (ticker: T), whose 6.8% yield makes it well-liked with some earnings buyers, grew its payout at a 2% annual clip from 2015 via 2020.
Barron’s, nevertheless, wished to zero in on the Aristocrats with the fastest-growing dividends over that point. With the assist of FactSet information, we landed on these 5 firms:
A.O. Smith
(AOS),
AbbVie
(ABBV),
Lowe’s
(LOW),
Illinois Tool Works
(ITW), and S&P Global (SPGI).
Annualized dividend development charges are based mostly on evaluating payouts in 2015 and 2020. YTD return contains capital appreciation and dividends. Data as of April 5.
Sources: Simply Safe Dividends, FactSet
Topping the record is
A.O. Smith,
whose merchandise embody fuel and electrical water heaters, with a five-year annual dividend development charge of about 21%. The inventory, which as of April 5 had returned about 25% this yr, yields 1.5%. The firm mentioned in a latest report that it has paid money dividends on its widespread inventory yearly since 1940.
Investors in pharmaceutical agency
AbbVie
have had the better of two worlds—sturdy dividend development and a pleasant yield, most lately 4.9%. The inventory, nevertheless, is flattish this yr.
The firm, whose portfolio contains blockbuster prescription drug Humira, has boosted its dividend at a five-year annual clip of 18%. Last fall, it declared a quarterly payout of $1.30 a share, up 10% from $1.18 beforehand.
Sales of Humira, which is used to deal with rheumatoid arthritis and different circumstances, totaled about $20 billion final yr, in accordance with FactSet. For a few years, a priority about AbbVie was that it was too dependent Humira, making it susceptible to competitors. However, in 2019 AbbVie closed a $63 billion acquisition of Allergan in a transfer to broaden its portfolio.
Close behind AbbVie on the record is Lowe’s, which operates a big chain of home-improvement shops—a subsector that has held up fairly properly throughout the pandemic as many individuals proceed to work remotely and give attention to their houses.
The retailer’s inventory yields a so-so 1.2%, versus about 1.4% for the S&P 500, but it surely raised its dividend at an annual charge of about 17% from 2015 via 2020. The inventory has returned about 21% in 2021.
In August of final yr, the retailer declared a quarterly dividend of 60 cents a share, up by 5 cents, or 9%. In its most up-to-date fiscal yr, which resulted in late January, the firm’s free money circulate totaled about $9.three billion, helped by sturdy working efficiency, and it paid out about $1.7 billion in dividends. It additionally purchased again about $5 billion of its inventory.
Manufacturing agency Illinois Tool Works additionally made the record, owing to five-year an annual dividend development charge of round 17%. The inventory, which provides a stable yield of two.1%, has returned about 10% this yr.
The firm final August declared a quarterly dividend of $114 a share, up 7% from $1.07.
Rounding out the record is S&P Global, whose merchandise embody securities rankings, benchmarks, information, and analytics. The inventory, which yields 0.8%, sports activities an annual five-year dividend development charge of about 15%.
Except for AbbVie, these shares present that fast-growing dividend shares typically include decrease yields, even amongst the S&P 500 Dividend Aristocrats.
Write to Lawrence C. Strauss at lawrence.strauss@barrons.com
