7 Dividend Growth Stocks Worth Owning


Do you invest in dividend growth stocks? If you don’t, you ought to consider doing so. These dividend stocks to buy could be your ticket to a better retirement.

Many dividend investors get caught up focusing on yield when the growth is what’s truly important. By utilizing the power of compound interest, investors can achieve higher returns by merely owning the stocks of companies who regularly hike their dividends.

A Canadian finance site, Hardbacon, provides an excellent example why investing in dividend growth stocks is a sound idea:


“If you invest in a stock which pays $1 in dividends a year and costs $25, it means it yields 4% at the time you buy it (dividend yield on cost),” wrote Sam Kovacs. “If the company increases its dividend 10 cents every year, in 10 years those same stocks which you bought for $25 will be paying out $2 in dividends, an outstanding 8% yield on cost.”

That’s the power of income-growth stocks. Here are seven dividend stocks to buy that are worth owning. If that’s not enough to get your mouth salivating, each has hiked its dividends in 2017 by 20% or more!


Dividend Stocks to Buy: Best Buy (BBY) Why Best Buy Co Inc BBY Stock Is a Great Buy Thanks to Apple IncBBY) and you’re likely to turn very skeptical. After all, Best Buy is supposed to be getting slaughtered in the electronics arena by Amazon.com, Inc. (NASDAQ:AMZN)./p pNot so fast./p pTake a quick look at Best Buy’s stock chart and you’ll see that it’s currently trading within 3% of its all-time high of $69.39. In 2017, it gained 64% on the year and that’s after a 45% gain in 2016./p pDuring the critical holiday shopping season, Best Buy held its own against Amazon according to industry analysis./p pI’ve been a fan of CEO Hubert Joly all the way back to 2013 when the former hospitality executive implemented his turnaround plan for the electronics retailer./p pDon’t be fooled by the company’s so-called weak Q3 2017 results. Same-store sales grew 4.4% and it earned 78 cents a share despite lowering prices to match Amazon, etc./p pBest Buy could easily hit $100 in 2018./p p Dividend Stocks to Buy: Vail Resorts (MTN) img class="alignnone size-full wp-image-909740" src="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn.jpg" alt="" width="728" height="400" srcset="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn.jpg 728w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-300x165.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-300×165.jpg/a 300w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-55x30.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-55×30.jpg/a 55w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-200x110.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-200×110.jpg/a 200w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-162x88.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-162×88.jpg/a 162w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-400x220.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-400×220.jpg/a 400w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-116x64.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-116×64.jpg/a 116w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-100x55.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-100×55.jpg/a 100w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-91x50.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-91×50.jpg/a 91w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-78x43.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-78×43.jpg/a 78w, a href="https://investorplace.com/wp-content/uploads/2017/03/mtnmsn-170x93.jpg"investorplace.com/wp-content/uploads/2017/03/mtnmsn-170×93.jpg/a 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock


The U.S. economy is unbelievably healthy right now and nobody benefits more from this than Vail Resorts, Inc. (NYSE:MTN), North America’s largest operator of ski resorts.

Its stock hasn’t had a down year since 2011 and although it’s down in early 2018 trading, all the signs point to another stellar year on the slopes.

“We have continued to drive significant growth in our destination markets which represent approximately 60% of our increase in pass units,” CEO Rob Katz said recently. “We continue to see strength across all geographies, with particularly strong performance in Northern California, the Pacific Northwest and the Northeast and continued solid growth in Colorado and British Columbia.“


The sale of season passes as of the beginning of December were up 14% in units and 20% in dollars over last year; they’re not headed downhill anytime soon.

Acquisitions drive Vail Resort’s growth — Whistler Blackcomb being its most significant to date — and it’s not about to stop looking for resorts to buy that cater to both the affluent destination visitor as well as the local season-pass skier.

We might be aging but not quickly enough to slow Vail Resorts over the next decade. MTN might be the best dividend growth stock of the bunch.


Dividend Stocks to Buy: Oneok (ONE) OKE), one of the biggest midstream service providers in the U.S./p pAs most of the Northeast fight a brutal winter storm early in 2018, natural gas prices have spiked to unprecedented levels; a problem made worse by the fact there’s a shortage of pipelines shipping natural gas to cities like New York and Boston./p pOneok can’t help with the Northeast as its pipelines and processing facilities are primarily west of the Mississippi River. However, it can help with the processing and shipping of natural gas and natural gas liquids (NGLs) in the regions it serves./p pOn January 4 it announced that it’s building $1.4 billion pipeline to transport NGLs from the Rocky Mountains to its Mid-Continent NGL facilities providing the middle part of the country with a more significant energy supply./p pIn 2017, OKE stock was relatively flat, down 2% on the year, significantly lower than the S&P 500, which was up 22%./p pThat’s the bad news./p pThe good news is that Oneok upped its annual dividend this past year by 21.1% to $2.98, providing a juicy 5.3% yield — double the 10-year U.S. Treasury./p pAs energy stocks go, Oneok’s a keeper./p p Dividend Stocks to Buy: Federal Agricultural Mortgage (AGM) img class="alignnone size-full wp-image-1096801" src="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn.jpg" alt="" width="728" height="400" srcset="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn.jpg 728w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-300x165.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-300×165.jpg/a 300w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-55x30.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-55×30.jpg/a 55w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-200x110.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-200×110.jpg/a 200w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-162x88.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-162×88.jpg/a 162w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-400x220.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-400×220.jpg/a 400w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-116x64.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-116×64.jpg/a 116w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-100x55.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-100×55.jpg/a 100w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-91x50.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-91×50.jpg/a 91w,https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-78×43.jpg 78w, a href="https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-170x93.jpg"investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-170×93.jpg/a 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock


This mostly unheralded stock is currently trading within 5% of its all-time high of $80.47. In 2017, it was up 39%, which followed an 85% gain in 2016. Over the past decade, it’s achieved an annualized total return of 12%, 300 basis points better than the S&P 500.

Currently yielding 1.9% after all of these gains, Federal Agricultural Mortgage Corp. (NYSE:AGM), better known as Farmer Mac, continues to be the agricultural industry’s best friend providing credit to agricultural lenders and businesses across the U.S.


With the need for food production likely to remain high indefinitely combined with a rigorous underwriting process, an investment in Farmer Mac is as reliable as they come.

In 2017, Farmer Mac upped the annual dividend by 38.5% to $1.44 a share. That’s money in the bank. Five years ago, AGM stock paid an annual dividend of just $0.48. In 2016, the company initiated a 30% payout target of core earnings which should keep the dividend growing at double digits on an annual basis.

If you like a little capital appreciation with your dividend growth stocks, AGM is for you.


Dividend Stocks to Buy: UnitedHealth (UNH) UnitedHealth UNH stockUNH) stock lost money on an annual basis? Try the Reagan era. I’m just kidding. It was 2008. Since then it’s rattled off nine consecutive years of gains./p pUNH operates two business segments: Health Benefits, which provides healthcare insurance to millions of Americans and Optum, its provider of healthcare services. Together, they play a big part in the wellness of America./p pIn December, UNH announced that it was buying the Davita Medical Group for $4.9 billion from Davita Inc (NYSE:DVA). Davita wants to focus on its dialysis business, so Optum was a natural home for the company’s nearly 300 clinics and six outpatient surgical centers./p pWhen you’ve got a market cap of nearly $220 billion like UnitedHealth, a $4.9 billion acquisition is coffee money — but it provides additional growth for Optum, so it’s a win/win./p pBottom line: UNH stock isn’t a big yielder at 1.3%, but it’s track record of growing its stock price should be enough for most investors. /p p Dividend Stocks to Buy: Illinois Tool Works (ITW) img class="alignnone size-full wp-image-1098206" src="https://investorplace.com/wp-content/uploads/2018/01/itwmsn.jpg" alt="" width="728" height="400" srcset="https://investorplace.com/wp-content/uploads/2018/01/itwmsn.jpg 728w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-300x165.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-300×165.jpg/a 300w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-55x30.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-55×30.jpg/a 55w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-200x110.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-200×110.jpg/a 200w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-162x88.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-162×88.jpg/a 162w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-400x220.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-400×220.jpg/a 400w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-116x64.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-116×64.jpg/a 116w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-100x55.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-100×55.jpg/a 100w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-91x50.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-91×50.jpg/a 91w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-78x43.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-78×43.jpg/a 78w, a href="https://investorplace.com/wp-content/uploads/2018/01/itwmsn-170x93.jpg"investorplace.com/wp-content/uploads/2018/01/itwmsn-170×93.jpg/a 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock


Of all 31 stocks on my list, Illinois Tool Works Inc. (NYSE:ITW) has the fifth-longest streak for the consecutive number of years raising its annual dividend at 43. In 2017, it raised its dividend by 20.0% to $3.12 per share. Since 2012, it’s grown its annual dividend by 15% on a compounded basis with the last two years seeing increases above that average.

Yes, it only yields 1.9%, but the dividend yield isn’t nearly as important as the dividend growth because a growing dividend typically is the result of growing earnings.

Usually, I’m not a fan of share repurchases, but ITW does a good job keeping track of how it’s doing on its buybacks. Over the past five years it’s repurchased $11.4 billion of its shares reducing the share count by 28%, but more importantly, earning a 24% internal rate of return on those purchases.

Even better, over half the $11.4 billion was used to buy shares in 2013 and 2014 at prices of $85 or less — it currently trades at $166.

Over the past five years, the industrial conglomerate’s been on a transformation to building a business that’s growing its margins and organic revenues while responsibly allocating capital.

Frankly, Illinois Tool Works is what General Electric Company (NYSE:GE) ought to aspire to.

Dividend Stocks to Buy: Cheesecake Factory (CAKE)

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