Why dividend growth matters
A dividend that grows protects your income against inflation, and reinvested growth compounds. A company that raises its payout 8% a year doubles it in about nine years. A stock with a lower starting yield can overtake a higher-yield stock over time if its dividend grows faster. You can test that yourself in the dividend growth calculator.
How we measure it
Growth here is the yearly change in the typical (median) payment over five full calendar years. We use the typical payment, not the yearly total, because totals jump around when a payment slips over New Year or a one-off special dividend is paid.
Fast growth often starts from a low base or comes with a low yield. A growth rate that is far above the company’s profit growth cannot continue for ever. Check the payout ratio before you assume it will.