Skip to main content

The Globe and Mail

Don’t be fooled by these big dividend-growing stocks

Dividends can play a key role in an investor’s total return. Studies show that companies that increase their payouts consistently are generally well-managed and have competitive advantages.

Getty Images/iStockphoto

A solid majority of the best-performing U.S. blue chips in the past year have been strong dividend growers.

Consistent dividend growth is a big contributor to share price gains, but there are exceptions. If you're looking for bargains in the U.S. stock market, these under-performing dividend growers might be worth a look.

Our pool of stocks for this screening exercise is the S&P 100 index, which is made up of the biggest stocks in the S&P 500. Stocks in the 100 index were ranked by five-year annualized dividend growth, a list that was topped by the likes of Citigroup, Bank of America and Cisco Systems. The trio delivered total returns of 43 per cent, 88 per cent and 30 per cent, respectively, in the past 12 months.

Story continues below advertisement

But buried in the list of top five-year dividend growers are some well-known stocks that have negative total returns for the past year. A few of the notable names are:

- CVS Health Corp.: This pharmacy company has posted five-year annualized dividend growth of 25 per cent, but its one-year total return is a loss of 16 per cent.

- Ford Motor Co.: The automaker's five-year dividend growth averaged 24.6 per cent, while the shares delivered a total return of negative 3.7 per cent.

- Starbucks Corp.: Five-year dividend growth of 24 per cent, but a one-year total return of minus 1.6 per cent.

- Target Corp.: The department store chain's dividend rose 15 per cent annually over the past five years, while the 12-month total return was a nasty loss of 29 per cent.

- Nike Inc.: Dividend growth of 15 per cent, and a one-year total return of negative 3.7 per cent.

- Coca-Cola Co.: The longtime dividend growth stalwart increased its payout to shareholders by an average 8.3 per cent over the past five years, while its shares fell 1.4 per cent in the past 12 months.

Story continues below advertisement

Dividend growth has become one of the most universal investing strategies of the past five years. Investors have bid the price way up on a lot of dividend growers, but there are exceptions.

Report an error Licensing Options
About the Author
Personal Finance Columnist

Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998. Rob's personal finance columns appear in The Globe on Tuesday and Thursday, and his Portfolio Strategy column for investors appears on Saturday. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.