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How to Find Companies With Strong Dividend Growth

Jeff Bailey

As we’ve written frequently at YCharts, current dividend yield is for chumps – the smart investor looks for long-term dividend growth and sound finances to support that growth.

Our recent series, beginning here, covered S&P 500 Dividend Aristocrats with the strongest 5-year dividend growth, and the list was topped by Lowe’s (LOW), and included such stellar names as McDonald’s (MCD) , Clorox (CLX) and Wal-Mart (WMT).

But suppose the Aristocrats aren’t your thing, and you want to search more widely for dividend growth? No problem. Go to the YChart Stock Screener and choose a list of stocks to survey, say the S&P 500. Then, hitting the “add a financial metric bar,” under “category” hit “cash flows statement.” Under “metric,” hit total common dividends paid.” And under format, choose your time line, such as “Growth: 10 year.” Boom. Now you’ve ranked the S&P 500 by 10-year dividend growth rates. Some of the top-ranked ones will be anomalies, with dividends that rose from nothing during the 10-year period. When you find a stock you’re interested in, click on the symbol.

Three big railroad stocks come up on the second page – CSX (CSX), Norfolk Southern (NSC) and Union Pacific (UNP).

NSC Dividend Chart
CSX Dividend Chart

The railroads have varying exposure to coal shipping, which is on the decline as utilities switch to cheap natural gas. But the railroads are fabulous franchises, with unparalleled barriers to entry, which is why Warren Buffett’s Berkshire Hathaway (BRK-B) bought Burlington Northern.

UNP PE Ratio TTM Chart

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com.

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