Income · Investing Glossary
What Is Dividend Growth?
A company increasing the amount of its dividend payment year over year.
The Full Definition
Dividend growth refers to a company's track record of raising its dividend payment over time, rather than holding it flat or cutting it. Companies that grow their dividend annually for 25+ consecutive years are known as Dividend Aristocrats, and 50+ years earns the title Dividend King. Consistent dividend growth signals durable earnings and disciplined management — a company can't fake a rising dividend for decades without the cash flow to back it up.
Real-World Example
A stock yielding 2% today but growing its dividend 8% per year will be yielding roughly 4% on your original purchase price within nine years — without the share price moving at all. That's why dividend growth investors often prioritize the growth rate over the starting yield.
Related Terms
- DividendA cash payment a company makes to shareholders, usually quarterly.
- Dividend YieldAnnual dividends paid as a percentage of the stock's current price.
- Payout RatioThe percentage of earnings a company pays out as dividends.
- ReinvestmentUsing investment income — dividends, interest, or capital gains — to buy more shares instead of cashing out.