I love dividend growth investing. I mean, what’s not to love? While you wait for the exponential increase in your wealth to play out over time, you’re collecting safe, growing dividends. That’s right.

It’s not just the steady rise in stock prices to look forward to, which increases your wealth. It’s also those reliable, rising cash dividends you’re collecting along the way.

You’re literally getting paid to invest in companies that are out there working hard to slowly make you rich. It’s easy to be patient and stay invested for the long term when you’re collecting steadily rising cash payouts.

Things are getting more expensive. That’s the nature of inflation and the world we live in. And you want to make sure your passive income can keep up and protect your purchasing power.

High-quality dividend growth stocks have inflation protection built right in through dividend increases. Today, I want to tell you about six dividend growth stocks that just increased their dividends. Ready? Let’s dig in.

The first dividend increase you should know about came courtesy of American Electric Power Company (AEP).

American Electric Power just increased their dividend by 5.4%.

This utility company is powering up investor’s passive dividend income by increasing the amount of the dividend they pay out to their shareholders. You really have to love it. Go to bed with one passive income amount. Wake up to a newer, larger amount of passive income. All while you did absolutely nothing other than continue to hold stock. It’s that easy.

This marks the 12th consecutive year of dividend increases for the electric utility company.

The mid-single-digit dividend raise this time around is pretty much what you’d expect from the company. Their 10-year dividend growth rate is 5.2%. So we’re right there. Meantime, the stock yields 3.7%. So that’s a nice balance between current income and the growth in that income toward your future. And the dividend is covered by a payout ratio of 66.5%.

The stock is up only 4% YTD, and its recent underperformance could be an opportunity.

I see the valuation here as attractive. Not the cheapest stock in the market. But it’s a decent deal on a solid utility business. The P/E ratio is 18.1. And that’s not high in this market, even for a utility. That aforementioned 3.7% yield, by the way, doesn’t just easily beat the market; it’s also 40 basis points higher than the stock’s own five-year average yield. Take a look at this name, if you haven’t already.

Next up, let’s talk about the dividend increase that came in from Brown & Brown (BRO).

Brown & Brown just increased their dividend by 10.8%.

A double-digit increase in your passive dividend income for sitting on your hands and simply not selling shares. That’s the life of a dividend growth investor. And it’s fantastic.

This is the 28th consecutive year of dividend increases for the insurance company.

That dividend growth track record is as long as it possibly could be, as the company went public in 1993. So they’ve been increasing their dividend since going public. Love that. Their 10-year DGR is 8.3%, so this most recent dividend increase was actually outsized. And you want to see a pretty high rate of dividend growth here, since the stock yields only 0.6%. With a lowly payout ratio of 20.4%, you already know this dividend is headed higher for years to come.

This stock is up 43% this year, and the valuation looks stretched.

Every basic valuation metric is running well ahead of its respective recent historical average. For example, the P/E ratio of 33.1 is significantly higher than its own five-year average of 23.6. As you know from the videos I’ve produced, I’m a huge fan of the insurance space. And this is certainly a name to put on the radar. But I’d like to see a serious pullback here.

We now have to have a discussion about the dividend increase that was announced by HP Inc.(HPQ).

HP just increased their dividend by a whopping 29%.

When’s the last time you got a 29% pay raise from your day job? Never, right? I don’t think I ever got a pay raise like that, back when I still had a day job. Well, HP shareholders got a 29% pay raise for simply holding HP stock. It’s beautiful.

The information technology company has now increased their dividend for 12 consecutive years.

This dividend increase was a nice surprise for shareholders, as the 10-year DGR is 16.7%. Double-digit dividend raises are par for the course here, but 29% is definitely larger than expected. Plus, the stock yields 3.3%. If you can get a 3%+ yield and double-digit dividend growth, that’s money. Even after this huge dividend increase, the payout ratio of 31.1% remains low.

While the stock is up 27% this year, the valuation still looks appealing.

I don’t see anything expensive about the stock. The P/E ratio of 9.5 is less than half that of the market’s earnings multiple, and it’s not far off from the stock’s own five-year average P/E ratio. The P/CF ratio of 7.2 is quite a bit lower than its own five-year average of 8.0. I think this is a business worth taking a good look at right now.

Next, I want to tell you about the dividend increase that came from Lincoln Electric Holdings (LECO).

Lincoln Electric just increased their dividend by 9.8%.

Yet another sizable dividend increase from yet another dividend growth stock. This is dividend growth investing in action. This is what’s so wonderful about this strategy. You sit back, slowly get rich, and collect ever-larger dividends along the way.

This is the 27th consecutive year of dividend increases for the manufacturing company.

Dividends are the proof in the profit pudding. Rising dividends are even better, as it means profits are likely also rising. Their 10-year DGR of 13.3% is paired with the stock’s current yield of 1.5%, so you’re looking at a yield-and-growth combination well into the double digits here. And with a payout ratio of 41.8%, this dividend is in a great position to keep growing.

The stock has been on a bit of a tear this year, up 28% in 2021, and the valuation is too rich for my blood.

This is a stock that has averaged a yield of 1.8% over the last five years, so any investors buying in right now are accepting a lower yield than they’ve typically been able to get. And the P/CF ratio of 23.7 is way higher than its own five-year average of 17.7. It’s a good business. But waiting for a pullback might be sensible.

I now have to highlight the dividend increase that was announced by Mueller Water Products (MWA).

Mueller Water Products just increased their dividend by 5.5%.

Not the biggest dividend increase out there. But it is more money. And it’s more money for doing nothing other than not selling shares. Being a long-term shareholder is the easiest and best gig there is.

This marks the seventh consecutive year of dividend increases for the water infrastructure products company.

I’m a huge fan of water. Not just for drinking or swimming. I’m talking about investing in it. Because it’s probably going to be the liquid gold of this century, much in the way that oil was the liquid gold of the last century. This dividend increase pales in comparison to the five-year dividend growth rate of 22.4%, so I’d like to see the next dividend increase come in a bit higher. That’s particularly so since the yield is only 1.3%. With a payout ratio of 47.3%, the dividend has room to go higher.

This name is up 35% this year, which is fantastic for existing investors. But new investors might want to wait for a pullback.

The current yield is below its five-year average, so anyone considering buying in today would be getting a lower yield than what you could have usually gotten. And with the P/E ratio of 33.1 being noticeably higher than its own five-year average of 28.3, a good pullback is probably needed here before thinking about putting capital to work.

Last but certainly not least, let’s talk about the dividend increase that came in from Stepan Company (SCL).

Stepan just increased their dividend by 9.8%.

I imagine Stepan investors are very happy. They get to wake up to the news that their totally passive dividend income is now going to be even higher than it was before. That sure beats a cold bowl of cereal in the morning.

The specialty chemicals company has now increased their dividend for 54 consecutive years.

That’s the kind of consistency and reliability I like to see from dividend growth stocks. More than 50 straight years of ever-higher dividends, a time frame that stretches everything from wars to a global pandemic. None of it stopped Stepan Company. Their 10-year DGR is 8.7%, so this dividend increase was rather nice. However, the stock yields 1.1%. So you really do need significant dividend growth to make sense of it. But with a payout ratio of only 21.2%, there’s a lot of room for many more sizable dividend increases.

This stock is basically flat on the year, and the valuation looks fair.

Every basic valuation metric is close to its respective recent historical average. So anyone buying the stock today looks like they’re getting a fair shake to me. That low yield, for instance? Yeah, that’s kind of the norm here. This stock’s five-year average yield is 1%. Also, the current P/E ratio of 18.5 is lower than its own five-year average of 21.0. It’s not the cheapest or highest-yielding stock out there. But getting a fair deal on a business with more than 50 consecutive years of increasing dividends is not something to take lightly. If your portfolio needs a specialty chemicals business, give this name a look.

— 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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Source: DividendsAndIncome.com