The Fastest Growing Dividends Of The Decade

SummaryA retrospective look at the fastest growing dividends of the last decade.
Top 10: LUV, MA, CE, HP, UNH, V, WLK, MKTX, TXN, AOS.
Honorable Mention: OZK, WRK, TJX, ROST, CBRL, CMI, UNP, RGA, IPAR.
Everybody loves dividend paying companies. Even more so if the dividends grow. Plenty of companies can manage moderate, single-digit percentage increases in their dividends every year. Above average ones can manage double-digit increases. The truly exceptional ones can sustain more than 20% annualized growth over a prolonged period. These are the companies with the fastest growing dividends of the last decade:
Note: For the purposes of this exercise, I excluded companies which cut their dividend during the Great Recession. (Many banks reduced their dividends to 1 cent, resulting in abnormally large increases in subsequent years.) Additionally, I excluded companies which initiated dividends in 2010 or later, as I wanted to be able to consistently compare companies with established dividend histories. CAGRs were calculated based on actual dividends paid in 2010 and estimated dividends to be paid in 2020 based on the most recently announced dividend rate, not taking into account any potential increases during the year.
#1: Southwest Airlines (LUV)
Surprised to see an airline take the top spot? Me too. Southwest Airlines has been paying a dividend since 1989, but it had grown erratically and was frozen at 1.8 cents per year starting in 2001. It wasn’t until 2012, when earnings started taking off (pardon the pun), that LUV began consistently increasing its dividend. The payout ratio in 2010 was an undemanding 2.4%. Rapidly growing earnings and a boost in the payout ratio to 16% have caused the dividend to grow at 45% CAGR over the last 10 years. If you consider that the dividend growth didn’t really start until 2012, that becomes 50.7% CAGR over 9 years. Southwest’s earnings growth has certainly slowed down, but there is still plenty of room for continued... Read more