Living off of dividends is a dream come true. I’ve been living this dream for about five years now. And trust me, it’s everything it’s cracked up to be – and more.

However, you want to make sure that you’re not just living off of dividends. You want to live off of safe, growing dividends. Safety is super important. The last thing you want to do is see your passive income take a hit from dividend cuts. And growth is critical.

Inflation is like this invisible tax that makes everything more expensive over time. If your dividend income can’t keep up with that, you’ll fall behind.

This is why I focus on, and personally invest in, high-quality dividend growth stocks. These are stocks that represent equity in world-class enterprises that pay safe, growing dividends to shareholders.

Today, I want to tell you about three dividend growth stocks that just increased their dividends. Ready? Let’s dig in.

#1 Dividend Growth Stock Rewarding Investors: National Retail Properties (NNN)

National Retail Properties just increased their dividend by 1.9%.

1.9% isn’t a huge increase. But it’s better than no increase at all. And it’s definitely a lot better than a dividend cut, which is what you tend to get with a lot of high-risk, high-yield junk stocks out there. National Retail is no junk stock. It’s one of the highest-quality stocks you’ll find, with one of the most reliable dividends you’ll find. Want evidence of that? Well, here you go.

This marks the 33rd consecutive year of dividend increases for the real estate company.

Can you imagine how difficult it is to run a business just right, so that you can hand out ever-larger cash payments to your investors for more than three straight decades in a row? That requires you to consistently run a world-class business that rakes in more and more money, year in and year out. While the dividend increase wasn’t massive, the stock does yield a juicy 4.5%. And their 10-year dividend growth rate is a respectable 3.2%. So this is a very nice income play that comes attached with a high level of reliability and some decent annual growth to boot.

Despite a 20% YTD run, the stock still looks reasonably valued to me.

Keep in mind, this stock was priced at around $60/share before the pandemic hit. It’s now below $50/share. And it’s not like the business has collapsed. Their real estate portfolio is 98.3% occupied. The P/CF ratio of 17.0 is not high for a REIT of this caliber. I wouldn’t say the stock is a steal. But it’s certainly not a bad idea.

#2 Dividend Growth Stock Rewarding Investors: Cummins (CMI)

Cummins just increased their dividend by 7.4%.

How can you not love being a dividend growth investor. You wake up one day and see that a fine company you’re invested in decided to give you a “pay raise” for doing nothing at all, other than simply holding stock. I mean, how much easier can it get? Not only that, but this excellent news comes in like clockwork, year after year.

The engine and generator company has now increased its dividend for 17 consecutive years.

This level of dividend growth is something they’ve been pretty consistent with over the last several years. Their five-year dividend growth rate is 6.6%, and their three-year dividend growth rate is 7.5%. So they’re right in that high-single-digit dividend growth area, which is paired with the stock’s current yield of 2.5%. That’s a pretty solid combination of yield and growth.

This stock has been a bit of a laggard, up only 5% this year.

Even so, it doesn’t appear to be notably undervalued. I think this is just a case where the overvaluation got a bit stretched, and recent stock performance has allowed the business to kind of grow into the valuation. The current P/E ratio of 18.4 is is a tad higher than its five-year average of 17.5. And the stock’s five-year average yield is 2.7%, so investors have typically, on average, been able to snag a higher yield on the stock than what they’re getting today. But a moderate dip in this name could be a great chance to grab shares for the long haul.

#3 Dividend Growth Stock Rewarding Investors: PPG Industries (PPG)

PPG just increased their dividend by a whopping 9.3%.

How’s that for an increase in passive income that can keep up with inflation? See, this is what’s so great about high-quality dividend growth stocks. It’s all about the growth of those dividends. While some investors load up on high-yield stocks and watch their performance lag and their dividends drop, high-quality dividend growth stocks like PPG give you great long-term investment performance and ever-higher dividends.

This is the 51st consecutive year of dividend increases for the coatings and materials company.

This isn’t just your run-of-the-mill Dividend Aristocrat, with 25 or more consecutive years of dividend increases. No. This is a Dividend King, with more than 50 consecutive years of dividend increases. Amazingly, the growth is accelerating. This 9.3% dividend increase is much higher than the stock’s 10-year dividend growth rate of 6.9%. No growth slowdown here at all. The only drawback to the dividend picture is the yield – the stock yields 1.4%, so you’re relying more on that growth with this one.

After a 50% move higher over the last year, the stock does look a little pricey.

It’s trading hands for a P/E ratio of 33, which represents a premium relative to its five-year average P/E ratio of 27.3. That said, this is the kind of high-quality dividend growth stock that is worth paying up for. You don’t get a diamond for the price of a cubic zirconia. And PPG is a diamond of a stock for sure.

— 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.


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