NEW YORK ( TheStreet) -- With 10-year Treasuries yielding stubbornly below 2%, the hue and cry among advisers has been to look for higher yielding dividend stocks. That might be decent advice for a whole lot of folks who need yield, but it's incomplete.
Specifically, investors should be looking for high yield stocks that have a track record of growing their dividends.
Not only is this sound advice, but it's applicable to a lot more investors.
The most obvious investors for this kind of strategy are retirees and near retirees, looking for income.
The chart below shows a group of companies that have at least doubled their dividend during the past 10 years.
That means shareholders who have owned them during the past 10 years have doubled their income too.
Many have enjoyed strong capital gains along the way.
For instance, in November 2002,
(MCD - Get Report)
shares were about $16. Today they're about $87.
Source: DRI Historical Dividends
buy-and-hold (and watch!) strategy
can also deliver the kind of growth that even conservative investors who want to preserve capital can get behind. Specifically, in the chart above, consider
(DRI - Get Report)
, which has seen its dividend rise nearly 30 times during the past 10 years.
Now here's what's interesting. In November 2002, Darden shares were $21.63 and paid an annual dividend of about 16 cents a share for a yield of approximately 0.75%. If you made a $10,000 investment at the time, you would have about 462 shares. Assuming you did not reinvest the dividends, your 462 shares would be throwing off $924 of cash, for a cash on cash return of 9.24% annually, a figure which handily beats the
five and 10 year performances.