Dividend Challengers List Ranked By Yield: Top 30

Vardah Gill
17 min read

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In this article, we discuss top 30 dividend challengers according to dividend yields. You can skip our detailed analysis of dividend growers and the performance of dividend stocks, and go directly to read Dividend Challengers List Ranked By Yield: Top 10.

The term Dividend Challengers refers to publicly traded companies in the US that have consistently increased their dividend payments to shareholders for a period spanning five to less than 10 consecutive years. This category includes companies that have demonstrated a commitment to distributing a portion of their profits to shareholders in the form of dividends over a moderate timeframe. Investors find dividend growers particularly attractive for several reasons. Historical data indicates that stocks belonging to this category have outperformed the broader market, delivering stronger returns. Moreover, these stocks tend to showcase lower levels of volatility compared to the overall market

T. Rowe Price conducted an analysis revealing that stocks exhibiting dividend growth within the large-cap Russell 1000 Index consistently outperformed the benchmark. This outperformance was observed both during market downturns and in more bullish periods over the 35 years concluding on December 31, 2020. The report also highlighted that, in contrast to securities relying heavily on an above-average yield for their total return, companies with the capacity to increase their cash flows and dividends consistently throughout economic cycles may counteract some of the erosive effects caused by inflation and higher interest rates. This suggests that businesses with the potential for sustained growth in cash flows and dividends may be more resilient in mitigating the impact of economic challenges, contributing to the preservation of the value of future cash flows.

In terms of absolute returns, dividends have historically constituted a significant portion of overall equity returns. Looking back to 1926, more than 40% of the total return of the U.S. stock market, as represented by the S&P 500 Index, has been attributed to dividends. However, dividends offer more than just their cash value. According to findings from a report by Cohen and Steers, companies that pay dividends have shown a considerable outperformance compared to non-payers, and they have achieved this with lower volatility. The report noted that in the last decade leading up to 2010, dividend-paying stocks outpaced non-payers by an annual margin of 620 basis points, while their risk, measured by standard deviation, was notably lower. This advantage of dividend payers over non-payers extends further over a 30-year time frame.

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