12 of 15 companies with dividend growth outperformed the S&P 500 — MarketWatch
In the United States, 12 of the 15 S&P 500 companies with the highest dividend growth rates over the past five years delivered total returns higher than the index itself. As MarketWatch reports, the S&P 500’s total five-year return with dividends reinvested stood at 82.2% as of September 15.
Companies with growing payouts
The sample included 273 S&P 500 companies whose shares had a dividend yield of at least 1% five years ago. They were ranked by the average annual growth rate of dividend payments. The 15 companies with a rate of at least 15% included Ares Management, Goldman Sachs Group, Wells Fargo, EOG Resources, Diamondback Energy, SLB, Darden Restaurants, Tractor Supply, American Express, KLA, Williams-Sonoma, Microchip Technology, Raymond James Financial, Steel Dynamics and Eli Lilly.
Ares Management posted the highest average annual dividend growth rate over five years, at 23.5%. Goldman Sachs and Wells Fargo each recorded 20.1%, EOG Resources recorded 19.8%, and Diamondback Energy recorded 19.6%.
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Stock returns
Eli Lilly posted the best total five-year return on the list at 409%, followed by KLA at 380% and Steel Dynamics at 297%. Diamondback Energy shares returned 221%, Goldman Sachs returned 174%, Williams-Sonoma returned 164%, and EOG Resources returned 159%, including reinvested dividends.
The publication cites Goldman Sachs as an example. A share bought on September 15, 2021, for $401.95 paid a quarterly dividend of $2 at the time, while its dividend yield was 1.99%. Over five years, the quarterly payment rose to $5. At Tuesday’s closing price of $976.67, the current dividend yield for a new investor was 2.05%, while the yield on shares purchased five years earlier was 4.98%.
At the same time, Goldman Sachs’ share price rose by 143% over the period, while the total return with dividends reinvested was 174%.
