Studies have shown that dividend growth stocks are historically one of the best-performing classes of equities, which are themselves the greatest long-term wealth generators you can own.
That makes intuitive sense, because companies that grow their dividends consistently over time have shareholder-friendly, conservative corporate cultures that have to focus on wise shareholder capital allocation and strong balance sheets.
Dividend Aristocrats are S&P 500 companies that have raised their dividends each year for at least 25 years in a row, and the group has outperformed the broader market over the last decade. Investors can learn more about each Dividend Aristocrat stock by clicking here.
Here are 10 high-quality dividend growth stocks, each of which is rewarding income investors with rising payouts, and is likely to generate solid long-term total returns in the years and decades to come. In other words, 10 stocks that deserve a spot in your diversified dividend portfolio.
We own several of them in our top dividend portfolios.
1. TD Ameritrade (AMTD)
Most Recent Dividend Increase: 6%
TD Ameritrade is a great way to benefit from the likely increase of U.S. interest rates. That's because 45% of its interest rate-sensitive assets are tied to short-term rates, and thus will form a strong near-term earnings tailwind as rates rise in 2017.
Better yet, TD Ameritrade benefits from its its close affiliation with Canadian banking giant Toronto Dominion Bank, which is its largest shareholder. Like other Canadian banks, Toronto Dominion has more conservative balance sheets than its American counterparts.
And with a low trailing 12-month payout ratio of just 44%, TD Ameritrade is well positioned to continue growing its dividends at a solid clip in the coming years. In fact, analysts expect TD Ameritrade to generate 12.6% average annual EPS growth over the next five years. And while such long-term forecasts must always be weighed carefully, my own research and growth models suggest that this is indeed a reasonable growth assessment, one that should allow TD Ameritrade to reward long-term dividend growth investors with very nice total returns in the coming years.