One of the best facets of quality dividend stocks is not their regular distribution or even the history of their dividends, but rather their history of dividend growth. Companies that regularly increase their dividends provide investors with a growing revenue stream and increased confidence in increased payments in the future.
But which companies pay significant dividends and growth likely to continue to grow in the coming years? Two stocks that correspond to these characteristics are Home Depot (NYSE: HD) and Wendyof (NASDAQ: WEN), both of which announced a significant increase in dividends in February.
Here is an overview of each of these dividend stocks.
In conjunction with the fourth quarter results released on February 26, The Home Depot announced a 32% dividend increase. This represents a significant acceleration compared to the 15.8% increase in the company's dividend last year. In fact, it is even higher than the company's average annualized dividend growth of 25% over the past five years.
The company's new quarterly dividend rises to $ 1.36 against $ 1.03 previously and $ 5.44 per year. This translates into a dividend yield of 3%.
The 32% increase in the dividend marks the tenth consecutive year of the company's increase. This significant increase "demonstrates our commitment to create value for our shareholders and a mark of confidence in future operations," said Craig Menear, CEO of The Home Depot, in the fourth quarter earnings release.
The company has a lot of growth room for the growth of its dividend. In the last 12 months, only $ 4.6 billion of Home Depot's $ 10.1 billion in free cash flow has been paid in dividends.
Wendy's announced February 13 an 18% increase in its quarterly dividend, bringing the company's quarterly dividend to $ 0.10, up from 0.085 cents. Wendy's new dividend is $ 0.40 on an annual basis, giving the stock a 2.3% dividend yield.
"Returning liquidity to shareholders remains a top priority for us," said Todd Penegor, CEO of Wendy's, in a press release, at the time of the announcement of the enhanced dividend. "This is the seventh year in a row that we have increased our dividend, reflecting the strong cash flow generated by our resilient and predictable business model."
This is a slight deceleration from last year's 21% increase, but still represents a large double-digit percentage increase.
Like Home Depot, Wendy's has more room for growth for its dividends, since it has only paid $ 81 million out of its $ 154 million cash flow available from the last 12 months.