15 Fastest Growing And Attractively Valueated Dividend Growth Stocks

Growth is very important for long-term investors. It doesn't make much sense to buy a stock and pay 20 times of earnings when growth is zero.

Today's stock markets are irrational valuated but you must pay this price if you don't get hurt by potential inflation.

Today I've created a small compilation of mid-term and long-term dividend growers with great sales growth over the past five years (over 10 percent annually). In addition, they have a low forward P/E as well as double-digit earnings growth forecasts for the next five years.

The list contains 15 stocks of which half are large capitalized and ten are recommended to buy.

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5 Top Stocks With Over 25 Percent 1-Year Dividend Growth And Potential To Grow Further

I've recently published an article about stocks with the fastest short-term dividend growth on my blog long-term-investments.blogspot.com. The top yielding pick with a double-digit dividend growth was Philipp Morris.

I love tobacco stocks and my own portfolio has around 25 percent of its assets invested into cigarettes producing companies.

Today I would highlight some stocks with more than 25 percent short-term dividend growth.

Technology stocks are the most dominant stock category in my screen in terms of dividend growth potential. They have huge amounts of cash and most of the old tech players are very profitable. 

Over the past few years, companies like eBay, Cisco, Microsoft or even Apple have failed to create new innovative products to boost growth but they still sit on tons of cash. 

As a result, some of them started to pay back a part of the free and growing mountains of money to shareholders via stock repurchases and dividends. I'm happy to see what they do because they are so profitable and don't need all this money.

Another group of stocks with big dividend growth rates is coming from the basic material or energy sector. Normally, I own only a small share of them in my portfolio because I've no idea how long our economy will be addicted by oil and gas. Further, it's also a black box to me because of the cyclic oil price and changing oil reserves.

However, below is a list of five top stocks that have raised their dividend payments over the recent year by more than 25 percent and they still have a good chance to grow their dividends in the future.

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Software Giant Microsoft Is The New Stock Buy For My Passive Income Portfolio

Past Friday, I purchased shares of the software giant Microsoft. The company has a P/E of 13.08 which should fall to a ratio of 11.32 by next year. Earnings growth of 8.7 percent for the next five years is forecasted by analysts.

Microsoft announced recently to raise their future dividends by 22 percent and buy back $40 billion in own shares. This should drive trading volume into the stock. The expected dividend yield is 3.31 percent.

I believe that the microsoft stock has still potential to grow dividends in the future. Despite the weakness with the implementation of new technologies, Microsoft is still a growth stock. Sales more than doubled within the past decade and earnings increased by a factor of 2.5x. That's pretty good for the company with $77 billion cash and $12.6 billion long-term debt.

However, I put 40 shares at $33.88 into the Dividend Yield Passive Income Portfolio. The total purchase amount resulted in $1,360 which should bring additional $45 in yearly dividends.

Latest Portfolio Transactions (Click to enlarge)

Portfolio Overview I (Click to enlarge)

Portfolio Overview I (Click to enlarge)

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For readers who are new to the matter and my dividend growth philosophy: I funded a virtual portfolio with 100k on October 04, 2012 with the aim to build a passive income stream that doubles each five to ten years. I plan to purchase each week one stock holding until the money is fully invested. The total number of constituents is expected at 50 – 70 companies and the dividend income should be at least at $3,000 per year.

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Over the full year, the expected dividend income amounts to $2,485. With around $27,400 in deposited cash, it’s still possible to reach the $3,000 by the end of this year.

Portfolio Performance (Click to enlarge)

The full portfolio holdings are up 6.23 percent in average. Due to the high cash amount and slow buying process in a gaining market, the complete portfolio performance is only 5.85 percent.

Here is the income perspective of the portfolio

Sym	Name	P/E Ratio	Dividend Yield	Buy	# Shrs	Income	Value
TRI	Thomson Reuters C	26.32	3.75	28.90	50	$64.75	$1,725.50
LMT	Lockheed Martin C	13.78	3.75	92.72	20	$92.00	$2,450.00
INTC	Intel Corporation	12.21	3.98	21.27	50	$45.00	$1,140.50
MCD	McDonald's Corpor	17.33	3.25	87.33	15	$46.20	$1,420.50
WU	Western Union Com	11.77	2.68	11.95	100	$50.00	$1,878.00
PM	Philip Morris Int	17	4.03	85.42	20	$70.58	$1,740.80
JNJ	Johnson & Johnson	19.22	2.93	69.19	20	$50.80	$1,746.20
MO	Altria Group Inc	15.86	5.19	33.48	40	$72.00	$1,386.00
SYY	Sysco Corporation	18.9	3.55	31.65	40	$44.80	$1,268.80
DRI	Darden Restaurant	16.32	3.37	46.66	30	$46.50	$1,401.60
CA	CA Inc.	12.77	3.42	21.86	50	$50.00	$1,478.50
PG	Procter & Gamble	19.65	3.07	68.72	25	$58.20	$1,900.50
KRFT	Kraft Foods Group	17.17	3.76	44.41	40	$80.00	$2,128.80
MAT	Mattel Inc.	18.93	3.3	36.45	40	$55.60	$1,702.00
PEP	Pepsico Inc. Com	18.71	2.78	70.88	20	$44.20	$1,592.40
KMB	Kimberly-Clark Co	20.08	3.36	86.82	15	$47.55	$1,413.90
COP	ConocoPhillips Co	11.7	3.81	61.06	20	$52.80	$1,419.40
GIS	General Mills In	17.85	2.18	42.13	30	$31.20	$1,438.50
UL	Unilever PLC Comm	18.06	3.5	39.65	35	$47.01	$1,334.55
NSRGY	NESTLE SA REG SHR	19.1	3.15	68.69	30	$65.31	$2,058.00
GE	General Electric	17.84	3.15	23.39	65	$49.40	$1,563.25
ADP	Automatic Data Pr	24.64	2.45	61.65	25	$43.50	$1,788.00
K	Kellogg Company C	22.56	3.02	61.52	25	$44.50	$1,484.00
KO	Coca-Cola Company	19.57	2.95	38.83	40	$43.80	$1,488.00
RTN	Raytheon Company	12.94	2.87	57.04	20	$43.00	$1,485.00
RCI	Rogers Communicat	11.39	3.97	46.5	50	$84.00	$2,150.00
GPC	Genuine Parts Com	17.87	2.65	77.06	20	$42.12	$1,613.00
TSCDY	TESCO PLC SPONS A	N/A	3.87	17.08	110	$75.68	$1,931.60
APD	Air Products and	22.5	2.63	85.71	15	$41.55	$1,594.65
GSK	GlaxoSmithKline P	19.35	4.66	52.16	30	$71.13	$1,503.30
WMT	Wal-Mart Stores	14.24	2.47	79.25	20	$36.16	$1,456.00
BTI	British American	15.78	4.05	111.13	23	$96.14	$2,363.71
CHL	China Mobile Limi	10.81	4.06	55.32	25	$55.95	$1,373.75
MMM	3M Company Common	18.56	2.1	110.27	15	$37.43	$1,791.00
TUP	Tupperware Brands	18.61	2.56	80.98	15	$33.30	$1,313.40
IBM	International Bus	13.05	1.96	197.09	16	$57.60	$2,945.60
HAS	Hasbro Inc.	18.99	3.24	44.09	30	$45.60	$1,422.90
T	AT&T Inc.	25.76	4.01	34.47	30	$40.50	$1,012.50
WAG	Walgreen Co. Comm	21.86	2.04	44.25	30	$34.20	$1,673.70
AFL	AFLAC Incorporate	8.74	2.23	59.39	20	$28.00	$1,274.60
TGT	Target Corporatio	15.29	2.38	68.69	32	$48.32	$2,029.12
CSCO	Cisco Systems In	12.37	2.83	25.12	90	$58.50	$2,071.80
DE	Deere & Company C	9.42	2.42	84.11	15	$29.85	$1,238.25
RGR	Sturm Ruger & Co	13.77	2.96	51.65	20	$38.52	$1,301.40
LO	Lorillard Inc Co	14.17	4.77	42.3	30	$65.00	$1,347.90
UNP	Union Pacific Cor	17.69	1.84	154.75	8	$22.88	$1,231.20
IDA	IDACORP Inc. Com	12.83	3.17	47.94	20	$30.40	$962.80
BAX	Baxter Internatio	16.08	2.92	66.38	20	$37.60	$1,300.20
MSFT	Microsoft Corpora	13.12	2.72	33.88	40	$36.80	$1,355.20
						$2,485.92	$78,690.28
						Average Yield	3.16%
						Yield On Cost	3.37%

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