Investors who buy dividend stocks do so for the current income and the potential for that income to grow in the future. There are a couple of ways to ensure that happens. One is to assume a steady dividend and reinvest dividend income to buy fractions of more dividend stocks. The other is to hope that the issuing company increases its dividend payment in the future.
That’s exactly what the three firms discussed below have done. Two of them have increased their dividend growth rate by 15% or more over the past 5 years. Investors will always appreciate greater amounts of income from their portfolios. That’s what makes investing in fast-growing dividend stocks so appealing. Let’s take a look at those three companies and their respective, fast-growing dividends.
Eli Lilly (LLY)
Eli Lilly (NYSE:LLY) stock has exploded in value on the success of weight loss drugs Mounjaro and Zepbound. The company has other strong therapeutics including Jardiance and is much more than a one-trick pony but it is the weight loss drugs that have drawn so much investor attention of late.
Investors are well aware of that narrative and the rationale for investing in Eli Lilly at the moment. However, far fewer investors are probably aware of how quickly Eli Lilly has grown its dividend. That dividend has grown at an average annual rate of 15% over the past 5 years. It was also last reduced in 1986 and is very stable overall.
Sales grew by 26% in the first quarter primarily on the strength of its weight loss drug portfolio. that allowed the company to increase its 2024 guidance by $2 billion. Thus, it’s reasonable to anticipate that Eli Lilly May increase the pace of its dividend growth moving forward. it will certainly have the funds for such a decision if it chooses to do so.
Visa (V)
Visa (NYSE:V) stock boasts the fastest-growing dividend of the three shares discussed here. The company has grown that dividend at an average annual rate of 16% over the past 5 years.
As impressive as the dividend growth has been at Visa it’s hardly the only reason to consider investing in the stock. The company’s recent financial performance has been exceptionally strong. The American consumer continues to spend heavily leading to incredible credit card debt overall but strong performance for Visa. In the second quarter, both revenues and net income increased by 10% at the company.
Although Visa has grown its dividend rapidly the overall yield remains relatively low, below 1%. it’s certainly not the kind of dividend an investor should consider for its overall income production. However, it’s a strong company and in a few decades that dividend should be much larger. Beyond that, Visa is worth buying for its exposure to broad fintech trends.
McDonald’s (MCD)
McDonald’s (NYSE:MCD) is a strong dividend investment overall that will pop up on all sorts of lists discussing income stocks. The company is also currently facing issues which is probably the best place to start when discussing it.
McDonald’s is relatively flat performance wise and the stock has declined in 2024 as a result. the company is not considered to be the same value option that it was in years past. In response, the company has attempted to reintroduce popular discounts including a $5 meal deal. The company was kicking that idea around earlier in the year but it fell by the wayside, likely due to franchisee pushback. However, the company reintroduced the idea in recent weeks and will reintroduce the $5 meal deal for 4 weeks beginning in late June.
So, there’s plenty of reason to believe that McDonald’s is capable of winning back disgruntled customers. That’s probably the best reason to invest in McDonald’s at the moment after it has fallen in 2024.
So, let’s look at its dividend growth as a secondary factor. McDonald’s has grown that dividend at an annual average of 7.6% over the past 5 years. Share prices are likely to move higher in the wake of the $5 deal meal deal announcement and dividend growth will continue to be strong. I’d say that makes McDonald’s stock a worthwhile investment at the moment.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
