3 Dividend Growth Stocks to Buy and Hold Forever

Long-term investors focused on quality companies tend to focus on stocks that pay dividends. The reasons for this are manifold.

Even better, though, are companies that can pay dividends consistently but also grow these dividends at a fast pace. These so-called “dividends growth” stocks offer faster increases in the dividend.

A company’s ability to do this also tends to rely on faster-than-average growth in revenues and profits. What you have, as an end result, is a fast-growing dividend over the longer term.

It’s here that long-term investors need not focus purely on the dividend yield. These dividend growth stocks should (ideally) actually have lower yields so that they have space to grow into a higher dividend yield.

A while back, I looked at five global stocks that investors can buy and hold forever.

Here, I thought I’d take that same approach and look at three global dividend growth stocks; two from the US and one from Hong Kong.

1. AIA Group

AIA Group Ltd (SEHK: 1299), an Asia-focused insurance giant, has been a star performer on the Hong Kong Stock Exchange since it listed back in October 2010.

The company has a presence in 18 Asia-Pacific markets and is a pure-play Asian insurance stock. It was founded in 1919 in Shanghai, China.

Even more impressive has been its growth in operating profit after tax, from US$2.24 billion in 2011 to US$5.74 billion in 2019.

Unsurprisingly, this has been supported by extraordinary growth in its dividend. As you can see below, it has grown its dividend per share (DPS) from HK$0.33 in 2011 to HK$1.266 in 2019.

AIA dividend growth

Source: AIA full-year 2019 earnings presentation

That means AIA’s dividend over the eight-year period had a compound annual growth rate (CAGR) of 18.3%.

2. Apple

Next up is iPhone behemoth Apple Inc (NASDAQ: AAPL). Many investors may not be aware of this but the tech giant actually pays a dividend.

Although its stock only yields around 1.1% at its current price, the company has been growing its dividend fast.

Apple’s revenue grew to an astounding US$91.8 billion in its first-quarter fiscal year 2020 (for the three months ended 31 December 2019) – a record high.

In terms of its dividend, it has grown its DPS from US$5.30 in FY 2012 to a split-adjusted US$21.56 in FY 2020.

That gives the iPhone producer a solid CAGR of its dividend over the eight-year period of 19.2%.

3. NextEra Energy

Finally, we have NextEra Energy (NYSE: NEE), a renewable energy provider. The company is also the world’s largest producer of wind and solar energy.

Based in Florida, it has delivered total shareholder returns of a whopping 945% over the past 15 years.

A lot of these returns have been focused on its growing dividend. Structurally, as the world moves towards renewable energy, and away from dirty fossil fuels, the stock also providers a great long-term narrative.

The dividend has backed this up. Its DPS in 2011 was US$2.20 while in 2019 this had grown to US$5.0 – meaning over the eight-year period its dividend’s CAGR was 10.8%.