One of the ways individual investors can accumulate wealth is through dividend investing. For decades, many investors, (including some of the richest in world) have been using this dividend-focused strategy by purchasing shares in a variety of household blue chips. By choosing high-quality companies that have consistently grown their distribution payments for years and reinvesting those dividends, portfolios can grow immensely over time.

Following a dividend growth strategy, retail investors are able to secure a steady stream of rising payouts that can help get them through their golden years. That's important, considering life spans continue to increase and the average person will spend almost as much time in retirement as he or she spent working.

However, not every stock that throws off a high dividend will lead to long-term wealth. The key for investors is making sure those dividends continue to rise in both good and bad markets.

SEE: The Power Of Dividend Growth

Stylish Chic
Focusing on discount designer apparel and home decor, retailer Target has paid a dividend every quarter since going public in 1967; those payouts are getting a boost, as well, this year. The firm has found success in the economic downturn by offering a larger selection of food and giving shoppers a 5% discount when they pay with Target-branded credit. Target recently announced in June that it would up its dividend by 20% with the next payout. Investors can now expect $1.44 per share per year from the retailer.

Despite a flat job market and shaky consumer confidence, Target has been able to drive traffic across its 1763 stores and recently announced back in May that its first-quarter profit rose 1.2% to $697 million. Those kinds of continued gains have prompted the company to buy back stock, as well as commit to its shareholders that it wants to boost its dividend considerably more in the years ahead. Target currently yields 2.4%.

SEE: The 4 R's Of Investing In Retail

Big Dividends in Dump-Trucks
Caterpillar's famous yellow trucks are an icon. Equally as iconic has been the company's long-term dividend policy and growth. The Peoria, Illinois heavy machinery manufacturer has paid a cash dividend every year since the company was formed in 1925 and recently upped its payout with the most money since the financial crisis hit in fall 2008. CAT will now be paying investors an extra six cents to put the quarterly cash dividend at 52 cents a share, up from 46 cents. That's a nice 6-cent boost per quarter.

This payout returns Caterpillar to the forefront of large dividend increases. Before the financial downturn, the company had hiked its payout by 16.7%. The firm managed to increase its dividend during the recession, and the recent bump represents a return to its high distribution growth days. Caterpillar CEO Doug Oberhelman said that the "13% increase in our dividend represents our continued commitment to providing value to stockholders." Look for more dividend increases down the road from the firm. Shares of CAT currently yield 2.5%.

More Than Just Condiments
We tend not to think about those little packets of ketchup that we put on a cheeseburger, but those condiments are big bucks for shareholders in Heinz. The global purveyor of pickles, mustard and other food products could be considered a portfolio staple. By focusing its 57 varieties on emerging markets, the company has continued to grow not only its bottom line, but its dividend payments as well.

Heinz recently approved a 7.3% increase in its annualized common stock dividend. This marks the firm's ninth consecutive year of dividend growth. Shareholders will now see an annualized common stock dividend of $2.06, an increase of 14 cents over last year. Like with CAT, Heinz CEO William R. Johnson said, "The 7.3% increase reflects the Company's solid performance and strong cash flow, continued confidence in our proven long-term growth strategy and most importantly, our commitment to enhancing shareholder value."

The Bottom Line
One of the surefire ways for investors to grow their wealth is by investing in strong dividend payers with a history of increasing those payouts. There are plenty of firms that meet this criteria, but the trio of retailer Target, heavy machinery manufacturer Caterpillar and consumer staple Heinz, have all upped their payouts strongly over the last year. For investors, these increases highlight the trios' long-term dedication to rewarding portfolios.

Related Articles
  1. Stock Analysis

    8 Solid Utility Stocks for a Bear Market

    If you're seeking modest appreciation, generous dividend payments and resiliency, consider these eight utility stocks.
  2. Investing Basics

    4 Reasons a Company Might Suspend Its Dividend

    Learn about the four most common reasons a company may choose to suspends its dividends, including financial trouble, funding growth and unexpected expenses.
  3. Mutual Funds & ETFs

    Top 4 Conservative Allocation Mutual Funds

    Discover the top-rated mutual funds in the conservative allocation category, and learn which investors can utilize them most effectively.
  4. Stock Analysis

    This is What Bill Gates's Portfolio Looks Like

    Find out about the stocks Bill Gates has in his portfolio. Learn about the close personal and business relationship Gates has with Warren Buffett.
  5. Savings

    7 Millionaire Myths

    Here are seven millionaire myths and realities that reveal they don’t quite have it all.
  6. Investing Basics

    5 Common Misconceptions About Dividends

    Here are five common misconceptions about dividends that are important to know.
  7. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  8. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  9. Stock Analysis

    Is BP's High-Yield Dividend Safe?

    Learn how receiving a greater than 7% yield from an oil major is a rare opportunity and one that comes with a fair share of potential dangers.
  10. Stock Analysis

    The 5 Best Dividend Stocks in the Healthcare Sector

    Learn about the top five dividend stocks of companies operating in the health care sector that generate substantial cash flows to afford high payouts.
  1. Do mutual funds pay interest?

    Some mutual funds pay interest, though it depends on the types of assets held in the funds' portfolios. Specifically, bond ... Read Full Answer >>
  2. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  3. Do mutual funds pay dividends?

    Depending on the specific assets in its portfolio, a mutual fund may generate income for shareholders in the form of capital ... Read Full Answer >>
  4. How often do mutual funds pay capital gains?

    The frequency with which mutual funds pay capital gains varies. However, funds that generate a profit within a given year ... Read Full Answer >>
  5. Can dividends be paid out monthly?

    Though it is more common for dividends to be paid quarterly or annually, some stocks do pay monthly dividends. Dividends: ... Read Full Answer >>
  6. Are dividends considered an asset?

    Whether dividends paid on stock are considered an asset depends on which role you play in the investment: the issuing company ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Ex Works (EXW)

    An international trade term requiring the seller to make goods ready for pickup at his or her own place of business. All ...
  2. Letter of Intent - LOI

    A document outlining the terms of an agreement before it is finalized. LOIs are usually not legally binding in their entirety. ...
  3. Purchasing Power

    The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing ...
  4. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  5. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  6. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!