Getting a pay raise is always a very nice thing. After all, who doesn’t like or want more money? But dividend growth investing takes this concept and supercharges it.

That’s because high-quality dividend growth stocks have long-term track records of handing out annual “pay raises” to shareholders.

Think decades upon decades of reliably getting pay raises every single year. This occurs through annual dividend increases.

And not just that, these dividend increases are often higher than the rate of inflation. This protects, or even expands, your purchasing power. But wait, there’s more.

These pay raises come without any hard work on your part. This is passive income. No need to show up early, stay late, or cozy up to the boss.

Instead, you only have to continue owning the stock you already bought. So we’re talking about something already awesome – passive income – and making it even better by regularly increasing it.

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 I have to share with you came from American Tower (AMT).

American Tower just increased their dividend by 6.1%.

This cell tower real estate investment trust continues to hand out towering dividend increases to their shareholders. And with society’s thirst for data consumption showing no signs of abating, there’s likely plenty more sizable dividend increases to come.

This is the 11th consecutive year in which the real estate investment trust has increased its dividend.

The five-year dividend growth rate is 19.1%, which is incredible. Now, you might look at this most recent 6.1% dividend increase and see the delta between the two numbers. Well, the discrepancy exists because American Tower tends to increase its dividend every quarter. Yep. Imagine not just getting a pay raise every year but every three months! This is actually the fourth dividend increase announced this calendar year by American Tower. The dividend is up by a total of 14.9% YOY. And that double-digit dividend growth is paired with the stock’s current yield of 2.0%. With AFFO/share easily covering the dividend, this dividend will likely continue to be increased every three months like clockwork.

This stock is up 27% this year, but the valuation isn’t crazy here.

Most basic valuation metrics are roughly in line with their recent respective historical averages. That aforementioned 2% yield, for instance, is actually 10 basis points higher than the stock’s own five-year average yield. The P/CF ratio of 23.8 might look rich at first glance, but that compares favorably to the stock’s five-year average P/CF ratio of 24.0. This is a stock that I’ve highlighted numerous times on the channel. If you’re looking for a high-performance, high-growth REIT exposed to 5G, take a look at American Tower.

Next up, let’s talk about the dividend increase that came in from Broadcom (AVGO).

Broadcom just increased their dividend by 13.9%.

How about that? You sit on your hands, don’t sell your stock, and you’re rewarded with a 14% increase in your passive income. All you had to do was… well, nothing. That’s so easy, even I can do it.

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

This double-digit dividend increase follows up a long line of double-digit dividend increases by Broadcom. Now, the monstrous 10-year DGR of 69.1% isn’t something that you can expect to persist forever. But I don’t think anyone is complaining about a 14% dividend boost. And this big dividend raise comes on top of the stock’s market-beating 2.5% yield. That’s a pretty compelling combination of yield and growth. This new dividend is only sucking up 58.6% of the company’s adjusted EPS, so Broadcom has a lot of leeway to continue increasing the dividend at a high rate – especially since they produce so much bottom-line growth.

This stock has had a huge run – up 52% this year. Who says dividend growth stocks are boring?

If that’s boring, I’d love to see exciting. I called Broadcom a cheap 5G dream stock last year. It’s definitely not nearly as cheap now as it was when I highlighted it. However, this is a company that grew its adjusted EPS by 26.4% YOY for FY 2021. That’s fantastic. And the earnings multiple, based on the adjusted EPS, is 23.0 right now. Cheap? No. Egregious? I don’t think so. This remains a 5G dream stock, even if I’d no longer add “cheap” to that description.

The third dividend boost I have to highlight is the one that was announced by C.H. Robinson Worldwide (CHRW).

C.H. Robinson just increased their dividend by 7.8%.

A near-8% rise in your passive dividend income. How can you not love it? High-quality dividend growth stocks are like the golden geese that lay ever-more golden eggs. You let the golden geese get fatter and happier, live off of the growing pile of golden eggs, and enjoy your blessings.

This is the 24th consecutive year of dividend increases for the logistics company.

Maybe you can count on 24 straight years of pay raises from your day job. Maybe not. Either way, it’s a lot easier to simply own high-quality dividend growth stocks. The 10-year DGR of 7.0% stacks up well against this most recent dividend increase. And the yield of 2.2% offers a good amount of current income to boot. With a payout ratio of 38.9%, this dividend is highly secure and positioned to continue growing for years to come.

This stock hasn’t had a meteoric rise this year, and it looks reasonably valued.

It’s up 9% YTD. That’s decent. But the market is up a lot more. Meanwhile, that’s left a P/E ratio of only 17.8, which is quite a bit lower than the earnings multiple the broader market is commanding right now. This stock has some catching up to do – both in performance terms and multiple terms. I don’t see why it can’t do that. The business had a phenomenal year, even if the stock didn’t. C.H. Robinson grew its revenue by nearly 50% for its most recent quarter – Q3. And EPS showed 85% YOY growth. Easy comps. But the company is firing on all cylinders. Take a look at this name, if you haven’t already.

I now want to highlight the dividend raise that came through from Mid-America Apartment Communities (MAA).

Mid-America Apartment Communities just increased their dividend by 6.1%.

Rent’s going up, right? You don’t need to be a renter or a genius to know this. Well, why not profit from it? This company owns apartment communities in some of the fastest-growing areas of the country, like Texas.

The apartment REIT has now increased its dividend for 12 consecutive years.

This most recent dividend raise was actually somewhat outsized for them, as the 10-year DGR is just 5.0%. With higher rental rates being sticky and difficult to dial back, I suspect that the dividend has a nice growth tailwind blowing its way. Plus, the stock yields a respectable 2.0%. The company’s full year 2021 FFO/share guidance is calling for $6.94 at the midpoint, easily covering the new quarterly dividend that adds up to $4.35/share per year.

This stock has skyrocketed this year – up nearly 80% in 2021. And the valuation leaves something to be desired.

Like the rents the company charges, its stock has been on fire. Most valuation metrics are rather high right now. For instance, the cash flow multiple is over 30. Its five-year average is 18.5. I really, really like this business. And I’m a very, very happy shareholder. But I’m glad I bought in at significantly lower prices. It’s a great name to have on the watch list, but I’d wait for a pullback before considering investing fresh capital here.

We now have to have a conversation about the dividend raise that came from Stryker (SYK).

Stryker just increased its dividend by 10.3%.

Everyone and their mother is talking about inflation right now. Well, when companies you’re invested in are handing out double-digit increases in your income, inflation becomes a non-issue.

This is the 29th consecutive year of dividend increases for the medical devices company.

This golden goose has been laying ever-more golden eggs for nearly 30 straight years. Longtime shareholders must be loving it. The 10-year DGR is 14.4%, so this most recent dividend increase wasn’t that far away. However, with a yield of only 1.1%, you really do need that big, double-digit dividend growth to make sense of the stock. The good news is that this new dividend shows a payout ratio of only 30.4%, based on the company’s midpoint adjusted EPS guidance for this fiscal year. They have the capability to easily hand out more double-digit dividend increases for the foreseeable future.

Stryker is a great business, but the valuation looks a bit stretched to me.

Most basic valuation metrics are running ahead of their respective recent historical averages. Now, the forward P/E ratio of 27.1, based on that aforementioned adjusted EPS guidance, isn’t in nosebleed territory. However, I see it as a bit rich. An alternative in this space is Medtronic PLC (MDT) – which I recently highlighted as a Dividend Aristocrat that looks undervalued. Like Stryker, it’s a medical devices maker. I like both businesses a lot, but Medtronic could be the better play right now.

Last but certainly not least, let’s talk about the dividend increase that was announced by Union Pacific (UNP).

Union Pacific just increased their dividend by 10.3%.

Awesome, right? Well, it’s actually better than you think. This is the second dividend increase this year from Union Pacific – they increased the dividend also by 10.3% back in the spring.

The railroad company has increased its dividend for 15 consecutive years.

And I think that actually belies this company’s quality and growth potential. I mean, Union Pacific was founded in 1862. And railroads are almost as important today as they were back then. The 10-year DGR is 20.5%, which is phenomenal. And we can see with two 10%+ dividend increases in 2021, Union Pacific is chugging along at that same level. The stock also yields 2%, which is plenty of yield when you’re getting 20% dividend growth. And as crazy as it might be, the payout ratio is still only 50.5% – even after two dividend increases this year.

The stock is up almost 20% YTD, but business performance justifies a lot of this.

Their most recent quarter – Q3 – produced all-time record results for operating income, operating ratio, net income, and earnings per share. They just hit fresh records after being in business for more than 150 years. How incredible is that? Revenue alone was up 13.2% YOY for Q3. Now, with a P/E ratio of 25.8, this is not a cheap stock. It looks fully valued to me. Perhaps even more than fully valued. But it’s a tremendous business, and you tend to get what you pay for. Also, it’s not like they’re building railroads any longer. If we get a pullback in the railroads, take a close look at Union Pacific.

— 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: Dividends and Income