Finding a company with a long track record of consistent dividend payments is only part of the winning formula for investing in dividend stocks. Dividend growth matters, too. Rising dividends not only make a stock more attractive to new income investors, but steady dividend hikes also reward existing investors with increasingly higher yields on shares purchased at lower prices in the past.
It's an opportune time to target dividend growers, according to Heidi Richardson, an investment strategist for BlackRock. Companies raising dividends are attractive in an aging bull market, when the pace of shareholder-friendly stock buybacks and mergers can slow. Dividend growers, she adds, can also offer an edge when interest rates are going up: "Stocks with a history of consistently growing their dividends have historically tended to perform well and exhibit less volatility in a rising-rate environment." Kiplinger expects at least two Federal Reserve rate hikes in 2017.
Identify reliable dividend stocks by concentrating on the Dividend Aristocrats, 50 companies in Standard & Poor's 500-stock index that have hiked their dividends every year for at least 25 consecutive years.
Since size, longevity and familiarity can provide comfort amid market uncertainty, here are the 25 biggest Dividend Aristocrats by market capitalization. Dominated by household names, the list is a good starting point to find high-quality companies for your long-term portfolio.