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Finding Dividend Stocks with Strong Payout Growth for Passive Income

One of the most important factors when choosing dividend stocks is finding companies with a consistent track record of increasing dividends annually over extended timeframes. Stocks demonstrating healthy dividend growth year after year reflect a strong underlying business able to sustain payouts through varied market environments.

Here are tips for screening dividend stocks for payout growth:

Use Public Company Databases
Use free stock screening tools like those on Finviz, MarketBeat, and SimplySafeDividends to screen and filter dividend stocks by criteria like consecutive years of dividend increases.

Review Historical Dividend Data
Analyze historical dividend data for stocks that meet other screening criteria to view the year-over-year payout growth rates over 5, 10, 20+ year periods. Steady incremental increases are ideal.

Favor Consistent Dividend Growers
Give preference to stocks with uninterrupted consecutive years of dividend increases, even during recessions. This demonstrates resilience to maintain and grow payouts.

Evaluate Growth Rates
While past consistency is key, also consider expected future growth. Analyze if current payout ratios and earnings trends support projected 5-10% annual dividend increases moving forward.

Research Management’s Commentary
Read earnings call transcripts and annual reports for management commentary expressing commitment to growing dividends regularly over the long term. This confirms priorities.

Consider Company Stage
Mature blue-chip stocks with stable profits may increase dividends modestly and reliably. Younger companies can sustain 20-30% dividend growth temporarily before slowing. Both have merit.

Diversify Across Sectors/Industries
Include stocks across many sectors for balance. Some industries like consumer staples reliably grow dividends continuously. Cyclical sectors exhibit more variability.

Favor Market Leaders
Leading companies with competitive advantages and profit dominance in their industries are better equipped to deliver steady payout growth as markets evolve.

Take a Long-term View
Temporary industry disruptions can halt dividend growth for even strong brands. Take a long-term perspective on growth trajectory beyond short-term interruptions.

Applying these screening criteria helps identify dividend stocks with the fundamental strength, profits, and management priorities to deliver payout growth year in and year out. Prioritize these stocks in your portfolio.

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