The Ultimate Guide to Finding Double Digit Dividend Growth Stocks



Is there a way to build a double digit dividend portfolio? I have mine! In this article, you will discover, step by step, how you can find strong dividend growth stocks that will make your retirement a lot more fun and safe. If you worry about your future revenues, dividend growth investing is definitely something you should look into. I suggest you bookmark this post as its over 3,000 words ;-).


Two weeks ago, I shared my own investing goals as follows:

#1 Adding a stable dividend growth stock (most likely from the consumer sector)

#2 Increase my existing positions through Dividend ReInvestment Plans (DRIP)

#3 Invest 10% of my portfolio in a US index ETF


Click here to read the rest of my 2013 investing goals.


Then, I’ve asked my newsletter subscribers what their 2013 dividend investing goals were. Many of you answered, thank you (I’m still busy answering email! Hahaha!) and one question really caught my attention. Here’s the email I received.


dividend growth1


This email gave me the idea to write this article. Many dividend investors are obviously looking for dividend growth. Some chase the highest yield dividend stocks, while others use DRIP and the power of compound interest to boost their dividend yield. In any case, the question is always the same:


dividend growth2



The concept of dividend investing is mainly based on a single fundamental aspect: business sustainability. If the company’s business model is sustainable, it will generate profits year after year. A good way to use these profits is to redistribute a part of them to investors. If you are able to find high dividend growth stocks, you will never have to worry about inflation and will withdraw a nice income stream from your portfolio at retirement. If you want to live off your dividends, you need to find these “magic” stocks.


Unfortunately, it’s easier said than done. Do you take into consideration the actual dividend growth? Past history? Future opportunities? The management team? What is most important? Payout ratio? EPS growth? Revenues? High dividend yield? These are the kinds of questions I will answer by sharing my method to find high dividend growth stocks. Here’s my step by step guide to building a strong dividend growth portfolio.


Step#1 – Forget About Double Digit Dividend Growth


So… it was all about a catchy title right? Not exactly. The reason why I called this post “Where to Find Double Digit Dividend Growth is because this is we are all looking for, The Holy Grail. If I told you that I would show you a method to find 3% dividend growth stocks, you would have stopped reading by now. The point is not to find a 3% dividend growth stock and it’s not to find a double digit dividend growth stock either. I believe that I will  enjoy much better success as an investor if I select stocks that will be able to sustainably increase their dividend each year for the next 30 years rather than trying to hit a homerun and pick a stock pushing its dividend through the roof  over the next 5 years.


For example, if you look at the dividend aristocrats dividend growth policy, you won’t find any double digit dividend growth stocks over the past 5 or 10 years. However, you will find 51 stocks with a 25 years + dividend growth policy behind their tie.


dividend growth3Mind you, if you find a double digit dividend growth stock, this means that the company has to sustain a double digit EPS growth as well. If the profit doesn’t follow the dividend payout growth, eventually it will hurt the dividend payout ratio and put at risk future dividend growth. This is why I focus on stocks that grow their dividend by more than 1% on average over the past 5 years. The goal is to pick stocks with a solid dividend growth strategy, not just the flavor of the moment.



Keep in mind that most stocks won’t increase their dividend by 8 to 10% during a recession either. So if you look at the past 5 years, you have to include the 2008 crisis when most companies had a hard time simply keeping their dividend payout as is. This is the main reason why I search for a 5 year dividend growth of at least 1%. There are some double digit dividend stocks (and I’m giving them to you later on in this post!), but you might ignore strong companies if you just look at dividend growth. You’ll see that with my method, I rarely pick a company with a small dividend growth policy and still need to keep my eyes open for opportunities!


Step#2 – Look at the Past

Now that you have realized this and won’t solely focus on dividend growth metrics, the second step to find high dividend growth stocks is to use the past to make up your mind about the present and the future. Being a strong dividend growth stock doesn’t happen overnight. It takes years of profitability and dividend growth to make sure that the company will continue on the dividend path for the future. This is why I use a stock screener for the first step of creating my list of dividend growth stocks.



I personally use FIN VIZ for the US stocks and TMX Stock Screener for the Canadian market. I made a complete list of websites for stock research here. It’s impossible to look at the entire stock market and make sound investing decisions. You can’t simply pick up just any stock paying a 4% dividend yield and pray that it will be a good choice. On the other hand, you can’t analyze hundreds of stocks before making a trade either. By using simple metrics, you can build a smaller list of stocks that already include some key characteristics to become a strong dividend payer.


a)     The Metrics I use in Each Filter


Using a stock screener is one thing, pulling high quality information out of it is another. Here’s a list of metrics I use for FIN VIZ and TMX Stock Screener to build my lists.

TMX Stock Screener (Canadian + US Stocks):


The TMX Stock Screener is interesting as you can get the dividend growth… and you can get it for US stocks as well! So even if it’s a “Canadian Screener”, you can work with it to find US dividend stocks. The combination of FIN VIZ and TMX Stock Screener will definitely give you a complete list of great stock pick possibilities.

5 Year Annual Income Growth Rate: between 1 and 100 (if sales don’t go up, dividend growth will eventually be jeopardized).


Current Dividend Yield: over 3% (I think 3% is reasonable in the current economy. I sometimes cheat and look for over 3% in the hopes of picking a gem with a 2.75% dividend yield).


Return on Equity: Over 10% (I want companies that use my money to create wealth. Keep in mind that you’ll need to look inside each financial statement to see if the ROE is stable over the years).


5 Year Annual Dividend Growth Rate: Over 1% (I know that I told you that we are looking at double digit dividend growth but the crisis in 2008 creates some statistical data errors as several companies stopped their dividend growth approach during that period)


Current Price Earnings Ratio: Under 15 (I’m looking at companies that are undervalued. Since the average P/E ratio of the market is historically around 15, it’s a good start. I sometimes cheat and put 20 if I don’t get what I’m looking for)


Here’s what you get on the NYSE as at January 25th 2013:

SymbolCompany NameP/E RatioIndustryDiv Yield (%)ROE (%)5 Yr Rev Growth (%)5 Yr Income Growth (%)5 Yr Div Growth (%)
CLF:USCliffs Natural Resources5.6Metals & Mining6.9415.223.9128.8340.33
RCI:USRogers Communications Inc. Cl B16.4Telecommunications3.4241.36.0626.6736.41
GES:USGuess? Inc.11.7Retail3.0418.48.825.4833.34
WGL:USWGL Holdings Inc.15.2Utilities3.8711.1-0.852.627.25
VALE:USVale SA6.8Metals & Mining6.602312.5510.4225.97
DRI:USDarden Restaurants Inc.13.1Leisure4.3724.75.1812.7523
WEC:USWisconsin Energy Corp.15.9Utilities3.5313.50.4311.718.84
LMT:USLockheed Martin Corp.10.7Aerospace/Defense4.93117.12.492.9618.76
MSB:USMesabi Trust10.3Financial Services7.7871,138.8011.811.9716.74
BCE:USBCE Inc.14.2Telecommunications5.1624.43.893.7916.44
CHT:USChunghwa Telecom Co. Ltd. ADS18.3Telecommunications4.3911.74.0710.8515.92
MCD:USMcDonalds Corp17.4Leisure3.3039.24.1519.0415.36
NPK:USNational Presto Industries Inc.12.4Consumer Durables15.663312.61.153.3515.21
BLX:USBanco Latinoamericano de Comercio Exterior S.A.9.3Banking5.23111.5-8.643.5514.57
RTN:USRaytheon Co.9.7Aerospace/Defense3.5421.93.321.7914.14
WMK:USWeis Markets Inc.13.2Retail3.079310.23.6810.2113.85
TAL:USTAL International Group Inc.10.6Diversified Services6.093421.58.9126.5512.97
NJR:USNew Jersey Resources Corp.18.6Utilities3.8611.4-6.028.9112.8
GIS:USGeneral Mills Inc.15.4Food & Beverage3.1725.94.58.5612.65
AZN:USAstraZeneca PLC ADS10.1Drugs3.6328.41.1710.1510.49
GNI:USGreat Northern Iron Ore4.7Metals & Mining28.2524168.79.579.510.11
SJI:USSouth Jersey Industries Inc.15.7Utilities3.3014.8-4.676.69.92
PG:USProcter & Gamble Co.19.6Consumer Non-Durables3.1916.90.861.599.8
WBK:USWestpac Banking Corp. ADS14.4Banking6.1313.514.777.099.37
SXL:USSunoco Logistics Partners L.P.15.2Energy3.8433.19.6824.299.22
LG:USLaclede Group Inc.14.2Utilities4.301610.4-10.740.258.93
TNH:USTerra Nitrogen Co. L.P.14.7Chemicals6.87209.52.46.718.87
CATO:USCato Corp. Cl A12.3Retail3.699615.92.0516.517.93
WPZ:USWilliams Partners L.P. Units19.5Chemicals6.5813.576.5817.427.92
RAI:USReynolds American Inc.16.5Tobacco5.4326.4-1.332.727.8
TD:USToronto-Dominion Bank12.4Banking3.7014.43.947.747.35
NEE:USNextEra Energy Inc14.1Utilities3.3313.5-0.827.637.14
KMB:USKimberly-Clark Corp.18.2Consumer Non-Durables3.42342.741.737.05
CNL:USCleco Corp.14.8Utilities3.2211.43.769.16.45
K:USKellogg Co.17.7Food & Beverage3.0048.72.363.996.23
RY:USRoyal Bank Of Canada12.5Banking3.9519.1-0.723.765.7
BNS:USBank of Nova Scotia11.2Banking3.9317.
SE:USSpectra Energy Corp17.5Energy4.52133.412.775.58
HNZ:USH.J. Heinz Co.19.4Food & Beverage3.4036.13.462.765.47
EPD:USEnterprise Products Partners L.P.19.1Energy4.8219.522.6317.815.39
BMO:USBank of Montreal10.4Banking4.5415.70.2611.494.64
BTE:USBaytex Energy Corp.19.3Energy5.9021.416.324.864.13
OKS:USONEOK Partners, L.P.16.5Energy4.7321.913.6511.474.12
SJR:USShaw Communications Inc. Cl B14.1Media4.1520.514.4623.263.9
CPK:USChesapeake Utilities Corp.17.1Utilities3.067210.810.899.133.87
SO:USSouthern Co.17.5Utilities4.4311.91.952.723.8
PNY:USPiedmont Natural Gas Co.19.7Utilities3.6711.7-8.973.43.75
TCP:USTC PipeLines LP16.4Energy7.2011.224.232.573.7
AEP:USAmerican Electric Power Company13.9Utilities4.2511.92.152.493.54
XEL:USXcel Energy Inc.14.7Utilities3.9410.20.176.333.17
SON:USSonoco Products Co.17.4Consumer Non-Durables3.871230.522.81
SCG:USScana Corp.15Utilities4.2510.1-2.612.242.43
SYY:USSysco Corp.16.8Wholesale3.5522.632.562.41
PBI:USPitney Bowes Inc.4.1Consumer Durables12.35492.6-3.888.212.41
ALV:USAutoliv Inc.12.3Automotive3.0413.65.221.712.09
BPT:USBP Prudhoe Bay Royalty Trust8.3Energy11.889625,221.501.072.032.03
UVV:USUniversal Corp.9.9Tobacco3.690715.42.644.262.01
VVC:USVectren Corp.15.7Utilities4.5810.8-0.810.621.95
DD:USE.I. du Pont de Nemours and Co.16.3Chemicals3.5829.
UHT:USUniversal Health Realty Income Trust8.9Real Estate4.563942.928.0530.311.26
BPO:USBrookfield Office Properties7.8Real Estate3.3315.117.7635.590.89


Out of 62 stocks, you get 21 double digit dividend growth stocks and 41 stocks with a dividend growth over 5%. Keep in mind that some stocks in this list are Canadian based companies (such as banks) traded on both the TSE and NYSE.


And here’s what you get on the TSE as at January 25th 2013:


SymbolCompany NameP/E RatioIndustryDiv Yield (%)ROE (%)5 Yr Rev Growth (%)5 Yr Income Growth (%)5 Yr Div Growth (%)
CVLCervus Equipment Corporation13.5Manufacturing3.951116.262.80.23
FCRFirst Capital Realty Inc.6.9Real Estate4.3816.68.2662.760.56
REI.UNRioCan Real Estate Investment Trust6.9Real Estate5.2218.119.3191.510.81
BPOBrookfield Office Properties Inc.7.8Real Estate3.3115.117.7635.590.89
AP.UNAllied Properties Real Estate Investment Trust6.3Real Estate3.9719.317.1276.021
AW.UNA&W Revenue Royalties Income Fund18.8Leisure6.3516.5N/A4.461.98
GWOGreat-West Lifeco Inc.12.1Insurance4.6718.31.660.012.8
SJR.BShaw Communications Inc.14.1Media4.0820.514.4623.263.9
BTEBaytex Energy Corp.19.3Energy5.8021.416.324.864.13
PWFPower Financial Corporation11.2Financial Services4.8127.21.650.234.51
BMOBank of Montreal10.4Banking4.5015.70.2611.494.64
BNSBank of Nova Scotia (The)11.2Banking3.9017.
RYRoyal Bank of Canada12.5Banking3.8819.1-0.723.765.7
VETVermilion Energy Inc.17.2Energy4.7021.44.774.856.01
ACDAccord Financial Corp.9.5Financial Services4.6613.7-0.166.946.92
AFNAg Growth International Inc.18.4Diversified Services6.8811.919.0811.577.17
TDToronto-Dominion Bank (The)12.4Banking3.6814.43.947.747.35
TTELUS Corporation16.9Telecommunications3.8915.84.922.837.97
LBLaurentian Bank of Canada9Banking4.3711.43.478.059.39
MKPMCAN Mortgage Corporation12.8Real Estate10.121112.670.1210.99
ALCAlgoma Central Corporation11.8Transportation19.1811.3-0.931.8811.28
BDIBlack Diamond Group Limited17.7Diversified Services3.281458.2261.1512.25
BCEBCE Inc.14.2Telecommunications5.1324.43.893.7916.44
CTYCalian Technologies Ltd.11.9Diversified Services5.1120.74.429.8223.6
RCI.BRogers Communications Inc.16.4Telecommunications3.3941.36.0626.6736.41


Out of 25 stocks, you get 6 double digit dividend growth stocks and 14 stocks with a dividend growth over 5%.


If you combine both lists, you have roughly 80 stocks (if we subtract Canadian stocks being traded on both markets) to build your portfolio with. If you put a dividend growth minimum of 5%, you will have about 50 stocks to pick from. This is more than enough to build a strong dividend growth portfolio!


FIN VIZ (US Stocks + Some CDN Stocks trading on NYSE)


The only bad news about FIN VIZ is you can’t get the 5 year dividend growth metric. This is why I published a list from the TMX instead of FIN VIZ.  It’s a good thing you can get them from the TMX stock screener! But this stock screener shows others metrics that the TMX doesn’t have… In order to a good research, you have to select other metrics to pick stocks that will show great dividend growth when you look at their financial statements. Here are the metrics I use:


Descriptive:dividend growth4

Dividend yield: over 3%



P/E Ratio: under 15

EPS Growth next 5 years: over 5%

Return on Equity: over 10%

Forward P/E Ratio: under 15

Sales Growth past 5 years: positive

EPS Growth past 5 years: over 5%

Payout ratio: under 70%



If you are looking for a complete step by step method on how to use a free stock screener, I created a walkthrough guide to FIN VIZ and TMX Stock Screener in my book Dividend Growth – Freedom Through Passive Income available at Amazon on both Kindle and Paperback versions. You will get additional information on how to build your stock list from your first screens and the next step to build your portfolio for safe and strong dividend payouts!






b)    Dividend Growth History


Now that you have your list ready, it’s time to perform some deeper analysis. The process between the stock list from your screener and the in-depth analysis of a few chosen ones is not covered here as it’s a case by case scenario. Depending on the type of portfolio you have and what you are currently looking for in terms of stocks and diversification, your picks will differ greatly from another investor.


Once you’ve selected a company from your screener, the next step is to download their financial statements. If you are lucky, you will find an “Investor Fact Sheet” or “Recap” giving you some key ratios such as Earnings per Shares, Sales, Profit, and Dividend Payouts throughout the past years.


If you can’t get a hold of a one pager giving you the information right away, you’ll have to dig inside the financial statements. Take the annual reports as you will have more than one year and the info might have been calculated for you already.


When you look at the dividend growth history, it is preferable to look at the past five years. Instead of simply calculating the dividend growth annualized rate, I suggest you make a quick graph of the past 5 years dividend payout. It will give you a clear idea of which stocks have a strong dividend payout strategy compared to another. The graph can be as simple as the following:



dividend growth5


Which looks a lot better than the following:


dividend growth6


The first graph is a good indication of a solid company that is looking to increase its dividend year after year. For the record, the first graph is TRP dividend growth and the second graph is Encana dividend growth.


c)     How are Sales and Earnings Per Share?


Looking at past dividend history is a good start to know if the company intends to boost its dividend in the future. But there is always a will and a way, right? So the company might have a strong dividend growth history over the past 5 years, it doesn’t mean that it is sustainable.


The relation between sales evolution and earning per shares will tell you 3 things:

How is the companys main market doing (if sales are growing or not)

How are the companys profits growing (are they making more profit or not)

How are the companys margins doing (if the sales and EPS graph don’t head in the same direction, that’s a red flag or very nice news for the companies’ margin)


dividend growth7To ensure stable dividend growth over time, it’s obvious that you need stable sales and earnings growth. Sales growth will ensure future cash flow and earnings growth will ensure that the company makes more money as sales climb. If these two metrics are negative or growing erratically, you will need to dig deeper into the financial statements to explain it or simply pick another stock to analyze.






Look at Procter & Gamble (PG)


dividend growth8


dividend growth9


As you can see right away, there is a call to action to dig deeper inside the financial statements; the sales are going up but the EPS is trailing behind. There must be something hurting the margins or special expenses that won’t happen in the future. You need to get these facts straight before you continue further and buy this stock.


However, if you look at Colgate-Palmolive (CL) you will find a better trend (while not perfect):

dividend growth10

dividend growth11

Step#3 – Look at the Present

dividend growth13Now that you are almost burnt by your in-depth analysis, you will realize that you are only halfway in the process! Note: if picking double digit dividend growth stocks was easy, we would all be rich! Looking at the past with stock screeners and financial statements will clear most “unreliable” stocks. Now it’s time to see if this baby can keep flying. A look at the most current information about the company will give you a great hint about its ability to increase and sustain its dividend.





a)     How is the Management in Place?


Something that is being ignored too often is the management team in place. Have members been there for a while and are they responsible for the good previous performances? If so, are they still on board to continue their good work and looking toward the future or simply to get their golden parachute?


Management compensation system explained in the financial statement along with the longevity of the board will help you make up your mind about their competencies. If you are lucky, you can even learn about their dividend payout philosophy for the upcoming years. If they put a lot of emphasis on their dividend in their financial statement, that’s a great sign that they will continue to push it forward.


b)    What the Company’s Recent Quarters Look Like?


Besides pure metrics which have already been analyzed in Step #2, recent quarterly results will tell you if they are beating analysts’ expectations lately. In addition to analysts’ opinions, you will also see if the company is infirming or confirming their previous sales guidance. A good site to get this information quickly from is Reuters, as they usually report when companies comment their previous outlook for the upcoming year. This is a good way to interpret the present and forward results in the future.


Look for companies confirming or increasing their earnings and sales guidance for the upcoming quarters.


c)     What Projects are They Currently Pursuing?


While you are looking for financial ratios within the financial statements, look for current and future projects as well. A dominating company in its sector must always look towards the future. For example, Intel (INTC) has been dominant in the PC world. However, they are experiencing problems entering in the tablet and smartphone sectors. Since PC sales are slowing down and INTC is still not able to expand into other markets, future growth will be harder to achieve and margins will be reduced.


I personally looked into INTC and saw that they are multiplying their efforts in order to build their niche into other markets. Following these current projects will tell me if INTC can successfully move from their previous business model (being the leader in processor chips for PCs) to a new business model (which not only includes tablets and smartphone but also servers and hosting services).


Step#4 – Look at the Future


dividend growth15From looking at past financial ratios to carefully analyzing the most recent results, you should now have a pretty good idea of where the company has been and where it’s going in the future. Unfortunately, you can’t go back into the past and buy shares 5 years ago, this why you have to project these numbers into the future to buy the right stocks.


Do You Think the Company Could Continue its Dividend Payout Strategy?


A stable evolution of sales, earnings and dividend payout ratio will answer this question. If the company has proven in the past it has the ability to generate growth and manage their earnings, chances are that their payout ratio will remain stable over time. It’s important to make your own opinion of the company instead of blindly believing what you read (even on this blog!). Your own opinion will matter during stock market slides as it will confirm or infirm your decision of holding this stock in your portfolio.


What Could Possibly Go Wrong in the Next Five Years? (and would it be bad enough to jeopardize the dividend growth?)


It’s always nice to see growth, new market and technology developments but sometimes, bad things happen too! Is the company solid enough to weather a recession? What kind of impact would a sales slowdown and pressure on margins have on the dividend payout? Is the company distributing all their profits (i.e. high dividend payout ratio) or is there room for bad luck?


Once you reach this point and ask these questions, you should be able to find the answer easily within the analysis you already made. This is why it is so important to have your own opinion and facts to back it up.


Step#5 – Review Your Stock Once a Year


dividend growth16When you pick a stock and make money with it throughout the year, it doesn’t mean that you will continue to make more in the future. Reviewing your stock holdings once a year is a must to make sure your companies show similar metrics and you still hold them forthe  reasons why you have picked them in the first place.



The stock market evolves rapidly and it’s important to make the difference between “noise” and the company fundamentals. As a last piece of advice, I would suggest avoiding falling in love with a stock. Don’t think that a bad company will rebound and don’t expect “good picks” to be good forever.


If you follow these steps for each stock you buy, chances are that you will be building double digit dividend growth portfolio over time. Always keep in mind that you are better off with a strong company with a 5% dividend growth than a double digit dividend growth stock with shaky fundamentals.


If you are looking for more help to manage your portfolio and optimize your tax situation, you can purchase my book on Amazon (click here for more info).


Dividend Growth eBook

This is the Best dividend Investing book your will EVER buy…

Here’s an excerpt of a review on Amazon (click on the link to read the review if you don’t believe me 😉 )

Great book – Mike (the author) is the reason I’m a dividend investor today. A guru in the dividend investment world.

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  1. says

    Mike this is the most detailed post i’ve ever read on dividend investing! Some great examples of what kind of growth you want to get decent payouts.

  2. jacques collin says

    I regularly use the free screener of where the above mentioned metrics can easily be found (only the 3Yr dividend growth however).The great advantage is that I am automatically alerted by mail whene there is a change is the stock list in plus or minus.

  3. Q Bert says

    DG, nice summary on the screening of stocks. However this is the same material that I was taught back in the early 90’s.

  4. Mike says

    @Q Bert,

    the stock market is not different than 30 years ago… besides that bonds don’t pay interest anymore 😉

  5. Mike says

    Hi Mike

    Do you have a general excel template that you’ve created to screen stock, that you’re able to share?




  1. […] Without any surprises, my favorite way to generate stable revenues from my investments is to buy dividend stocks. I believe that if I spend the next 30 years building a strong investment portfolio, my dividend payout will definitely be enough to support my lifestyle at retirement. I can make this happen by using a double digit dividend growth investing strategy. […]

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