I’m a huge fan of dividend growth investing. This investing strategy has radically changed my life for the better.
By systematically investing my savings into high-quality dividend growth stocks, I was able to go from below broke at age 27 to financially free at 33.
I then quit my job and retired in my early 30s. Totally passive dividend income now pays my bills. Sounds great, right? Well, it gets better.
These are dividend growth stocks. That means they’re regularly increasing the dividends they pay to shareholders. This allows you to keep up with inflation and the rising costs of life.
In fact, many high-quality dividend growth stocks are increasing their dividends even faster than inflation. Today, I want to tell you about three dividend growth stocks that just announced dividend increases. Ready?
Let’s dig in.
Dividend Increase #1: Northrop Grumman Corporation (NOC)
Northrop Grumman just increased their dividend by 8.3%.
Things are going up all the time. Housing, food, transportation, and… Northrop Grumman’s dividend. It’s difficult to care too much about inflation when you’re getting an 8%+ boost in your passive income without lifting a finger.
This marks the 18th consecutive year of dividend increases for the defense company.
Sovereign defense products and services are, unfortunately, necessary. And that necessity puts a floor under this company and its dividend, providing a high level of reliability. Your bills are very reliable, right? Well, you want your dividend income to be just as reliable, if not more so.
Surprisingly, this stock doesn’t look expensive.
Despite the company’s obvious high level of quality across the board, the valuation is quite reasonable – especially in this market. We highlighted this stock as an undervalued opportunity back in January when the stock was around $300/share.
Now north of $370/share, it’s basically closed a lot of that undervaluation gap that maybe shouldn’t have existed in the first place.
Dividend Increase #2: Ashland Global Holdings Inc. (ASH)
Ashland just increased their dividend by 9.1%.
All this talk about inflation seems to miss the elephant in the room. The rising tide is lifting all boats, including those dividend boats. When everything goes up, so does the revenue and profits that quality companies can generate. And that means, you guessed it, rising dividends.
This is the 12th consecutive year of dividend increases for the chemicals company.
Ashland has been dishing out consistently big dividend increases for years. Better yet, their dividend growth is actually accelerating. Their five-year dividend growth rate is 8.3%. But check this out. Last year’s dividend increase was 10%. And here we have a 9.1% increase. Gotta love that. The only bummer with the dividend is the low yield – the stock yields just 1.3%.
The stock has gone on a run over the last year, making the valuation a bit challenging.
Of course, what stock hasn’t gone a run? You have to pick your spots. The company’s GAAP earnings have been lumpy of late, impacted by the pandemic. That makes the P/E ratio, at near 40, look quite high. But the P/CF ratio, at 12.4, is well below its five-year average of 16.9.
Dividend Increase #3: Lennox International Inc. (LII)
Lennox International just boosted their dividend by a massive 19.5%.
High-quality dividend growth stocks continue to do what they’re known to do. That’s rewarding their shareholders with ever-larger dividends. Being a dividend growth investor is the best and easiest job I’ve ever had. Wake up. Get paid more money. Even I can do that.
The HVAC company has now increased its dividend for 12 consecutive years.
With the dividend taking up less than 30% of earnings, there’s likely a lot more where this dividend increase came from. By the way, these massive dividend increases are par for the course here. Their 10-year dividend growth rate is 18%. Last year’s dividend increase was 20%. And here we are with another stunner this year. Lennox shareholders must be very pleased.
This stock is up more than 70% over the last year, which has made it difficult to buy it now.
But as I always say, you get what you pay for. Quality stocks are rarely cheap. You don’t get a diamond for the price of a cubic zirconia. Notably, though, the P/CF ratio of 19 is below its five-year average of 21.9. And with the housing market going gangbusters, Lennox might be just getting heated up.
— 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.
Source: DividendsAndIncome.comWe’re Putting $2,000 / Month into These Stocks
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