5 Dividend Stocks That Turn Small Annual Raises Into Serious Long-Term Income
A dividend that grows beats one that just pays, but only if the raise keeps coming year after year. These five industrials have done exactly that, and the math behind their payout records reveals which ones still have room to…
A static yield gives the same check every year while inflation chips away at it. A rising payout works the other way: every raise lifts the income on shares you already own, with no new money required. Illinois Tool Works (NYSE:ITW | ITW Price Prediction) shows how far that compounding can run. Its quarterly dividend was $0.15 per share in 1999 and now stands at $1.72. The five industrial names below all have long, proven records of raising their payouts, and free cash flow gives for those raises. A long raise run shows discipline and cash generation. It ensures nothing, and run do end, so every section starts with the safety read.
Illinois Tool Works
Yield: ITW’s annualized forward dividend of $6.88 on a share price of $262.32 works out to a forward yield of about 2.62%.
Raise record: The quarterly payment due October 9 rises to $1.72 from $1.61, a 6.8% increase. The dividend records show an in-year step-up in every calendar year from 2010 through this year.
Safety read: Trailing dividends of $6.44 per share against trailing EPS of $11.03 put the payout ratio near 58%, above any other name in this group. Cash flow covers it comfortably. Q2 free cash flow rose 40.5% to $631M, and management looks for full-year free cash flow to exceed 100% of net income. ITW returned more than $1.20B to shareholders in Q2 alone, and its 26.7% operating margin funds both the dividend and about $1.5B of planned buybacks.
Bull case: Q2 revenue rose 6.1% to $4.30B, EPS of $2.84 beat the $2.80 estimate, and full-year GAAP EPS guidance was lifted to $11.35 to $11.55. Growing earnings give the board room for the next raise. The stock trades at 24 times trailing earnings and 22 times forward.
Risk: Two segments are lagging. Automotive OEM organic revenue slipped 0.4% and Food Equipment was flat in Q2, and tariffs and supply chains add pressure.
Snap-on
Yield: Snap-on (NYSE:SNA) gives an annualized forward dividend of $9.76 per share. At $358.38, that is a forward yield of about 2.72%, the highest of these five.
Raise record: The most recent increase lifted the quarterly rate from $2.14 to $2.44, a 14.0% jump. In the records, the quarterly rate has been higher every year since $0.30 in 2010, with an in-year raise in every year from 2019 through 2025. The board usually announces its raise late in the year.
Safety read: Trailing dividends of $9.46 against trailing EPS of $19.62 put the payout ratio near 48%. The balance sheet holds $1.64B in cash against $6.04B of shareholders’ equity, and Q2 operating cash flow rose to $271.5M from $237.2M. That left room for $91.4M of share repurchases in the quarter.
Bull case: The Commercial & Industrial Group grew 11.0% organically with margins up 330 bps to 16.8%, and gross margin expanded to 51.4%. At 18 times trailing earnings, Snap-on covers the lowest trailing multiple in this group, and shares are down 6.43% over the past month.
Risk: Financial Services originations fell 4.1% year over year, and management noted concern among U.S. technicians, the core customers who buy from Snap-on’s vans.
Cintas
Yield: Cintas (NASDAQ:CTAS) gives an annualized forward dividend of $2.08. At $199.23, that is a forward yield of about 1.04%. The starting yield is small. The growth rate is the draw.
Raise record: The latest quarterly payment rose to $0.52 from $0.45, a 15.6% raise. The records show an in-year increase every year from 2021 onward. The per-share figure dropped lower in 2024 after a stock split, then climbed again from $0.39 to $0.45 to $0.52.
Safety read: Trailing dividends of $1.87 against trailing EPS of $5.07 put the payout ratio near 37%. Fiscal Q1 free cash flow rose 48.7% to $464.8M, more than double the $208.8M total dividend paid in September. Last fiscal year, Cintas returned $1.65B to shareholders, including $952.1M of buybacks.
Bull case: Uniform rental and facility services bill on a recurring basis, and the numbers show it. Revenue grew 10.9% to $3.01B, adjusted EPS of $1.39 beat the $1.36 estimate, and management raised its fiscal 2027 adjusted EPS guidance to $5.45 to $5.54. The CEO called it “record revenue and record operating margin.”
Risk: The pending UniFirst acquisition is under FTC review and looks for to close before year-end. A long review or a difficult integration could tie up cash that would otherwise fund raises and buybacks.
Dover
Yield: Dover (NYSE:DOV) gives an annualized forward dividend of $2.10. At $187.92, that is a forward yield of about 1.12%.
Raise record: The records going back to 1999 show the regular quarterly dividend rising year by year, from $0.105 to $0.525. The latest step took the quarterly rate from $0.52 to $0.525.
Safety read: Dover has the largest buffer of the five. Trailing dividends of $2.08 against trailing EPS of $8.30 put the payout ratio near 25%. Q2 free cash flow rose 23.7% to $188.4M, and management looks for cash generation to pick up in the second half on seasonal working-capital release. The CEO said “Our balance sheet remains a competitive advantage.”
Bull case: Q2 bookings reached $2.33B versus $2.01B a year earlier, all five segments grew organically, and full-year adjusted EPS guidance rose to $10.55 to $10.75. Shares are down 3.03% this year and trade at 17 times forward earnings versus 23 times trailing. The CEO has said the stock is “from a multiple point of view, cheap.”
Risk: The raises are tiny. The latest increase was about 1.0%, and management says it wants to “keep our powder dry” for acquisitions. Looks for the income to keep growing slowly even while earnings climb.
Nordson
Yield: Nordson (NASDAQ:NDSN) gives an annualized forward dividend of $3.76. At $325.39, that is a forward yield of about 1.16%.
Raise record: The quarterly payout just rose to $0.94 from $0.82, a 14.6% raise. The records show annual increases in every year from 2002 through 2025, and this year’s raise continues that run.
Safety read: Trailing dividends of $3.28 against trailing EPS of $9.69 put the payout ratio near 34%. Fiscal Q3 free cash flow came in at $237 million, compared with $137 million in dividends paid over the first nine months of the fiscal year. Net debt stands near $1.6 billion with leverage of 1.7 times, and both are falling. The CEO pointed to “free cash flow conversion of well over 100% of net income.”
Bull case: Revenue rose 10.3% to $817.7M, adjusted EPS of $3.25 beat the $3.09 estimate, and all three segments set revenue records. Advanced Technology Solutions grew 31% organically, backlog is up 35%, and full-year adjusted EPS guidance now stands at $11.80 to $12.00.
Risk: The stock is up 42.7% over the past year and trades at 34 times trailing earnings, so new buyers start with a lower yield and more valuation risk.
Five Raise Records Side by Side
| Stock | Forward Yield | Payout Ratio | Latest Quarterly Raise |
|---|---|---|---|
| Illinois Tool Works | 2.62% | 58% | 6.8% |
| Snap-on | 2.72% | 48% | 14.0% |
| Cintas | 1.04% | 37% | 15.6% |
| Dover | 1.12% | 25% | 1.0% |
| Nordson | 1.16% | 34% | 14.6% |
Why Growth Beats Yield for Long-Term Holders
Snap-on and Illinois Tool Works pay the most income on today’s read. Cintas and Nordson are raising at double-digit rates, and Dover has the largest coverage buffer. All five pay out well under two-thirds of earnings, which leaves cash for the next raise. For a holder with years ahead, the raise matters more than the starting yield, because each increase builds on the last one and the income from the original investment keeps rising (that compounding is the whole point of a dividend ladder, and we laid out how to build one you never have to sell out of in a free guide here).
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
