10 Dividends That Can See Double-Digit Growth for 5 Years or Longer

Back in February, the paint and coatings giant raised its quarterly dividend by 31% to $1.13 per share. This increase came after 40 consecutive years of dividend increases, and the company has a low payout ratio. It may be hard to call for 30% dividend growth to be the norm a year after corporate tax rates were lowered, but this is a very low payout ratio, even considering its $10 billion in long-term debt.

Southwest Airlines

The first steady dividend payer of all airline carriers was Southwest Airlines Co. (NYSE: LUV). While it’s now more and more similar to a legacy carrier than just the discount carriers, Southwest got serious about its dividend payments in 2013, and it has been aggressively hiking the payout since. The four cents per quarter dividend in 2013 was up from just a one-cent quarterly payout before, and now the quarterly payout of $0.18 per share makes for a $0.72 per share annualized payout.

Southwest’s EPS was $4.24 in 2018, and the consensus forecast is that it will rise to $4.51 EPS in 2019 and $5.25 in 2020. The airlines may be more interested in buying back stock, but the payout ratio is only about 16% of expected current-year earnings. To add even more comfort, Southwest carries far less debt and leverage than its legacy carrier peers.


Starbucks Corp. (NASDAQ: SBUX) has a reputation for overcharging for coffee and other drinks, and the company has rapidly expanded its options for beverages and food along with its global footprint. Back in 2018, Starbucks updated its strategic priorities with a plan to return approximately $25 billion to shareholders via buybacks and dividends through fiscal year 2020. That was a $10 billion increase from its target announced in late 2017.

The most recent hike was 20% to the dividend, and the current $1.44 annualized per share payout compares with EPS estimates of $2.78 in 2019 and $3.09 in 2020. The only issue that may get in the way of double-digit growth seems to be if Starbucks overspends on its share buybacks or keeps increasing its long-term debt.


Visa Inc. (NYSE: V) has seen its shares surge in 2019, with a gain of 35% on last look. Unlike traditional credit card players, Visa is simply the clearing mechanism, and that means it has no transaction risk like the card issuers. It simply gets its fee with every transaction. One problem that Visa has is that its dividend is embarrassingly low at just 0.56%, and that $1.00 per share payout is against EPS of $4.61 last year, and consensus estimates are $5.37 EPS in 2019 and $6.21 EPS in 2020.

Visa’s last dividend hike was from $0.21 to $0.25 per share, and a 10% hike would only need to go to $0.275 per quarter (or $1.10 annualized). At that level, Visa would still be considered a “dividend miser.” A similar argument can be made for Mastercard, but Visa’s $400 billion market cap is considerably higher than Mastercard’s $282 billion.


Risk in the pharmaceutical sector around drug prices might make Zoetis Inc. (NYSE: ZTS) stand out here, but there is a consensus that companies won’t be regulated on what they charge for drug prices, vaccines and diagnostics for pets, fish, livestock and other animals.

With an annualized payout of $0.66 per share and a share price of $114, Zoetis does not quite yield even 0.6%. Earnings were $3.13 per share in 2018, and the consensus estimates are $3.48 per share in 2019 and $3.87 per share in 2020. The current quarterly payout of $0.164 per share was raised from $0.126 in 2018 and from $0.105 in 2017. Its debt has been rising to more than $6 billion as of last year, but with a $55 billion market cap and such a low payout, it seems more than safe to assume that Zoetis can and should be continuing with double-digit dividend hikes for some time.

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