Can The Top 10 S&P 500 Dividend Growers Continue Their Rapid Dividend Growth?

CF Industries Holdings, Inc. (NYSE:CF)

CF Industries Holdings, Inc. (NYSE:CF) manufactures and distributes nitrogen and phosphate fertilizer products worldwide. CF Industries was founded in 1946 and is based in Deerfield, Illinois.

CF Industries Holdings, Inc. (NYSE:CF) has been paying uninterrupted dividends since 2005. The annual dividend yield is at 3.63%, and the payout ratio is only 40.3%. The annual rate of dividend growth over the past three years was high at 55.4%, over the past five years was very high at 71.9%, and over the last ten years was also very high at 76.9%. However, the company has not raised its quarterly dividend since August 2014.

Since the payout ratio is low, I believe that the future quarterly dividend is sustainable. However, as I see it, the company would not keep its high five years dividend growth rate in the foreseeable future due to relatively low prices for nitrogen and phosphate fertilizer products.

Helmerich & Payne, Inc. (NYSE:HP)

Helmerich & Payne (HP) is a contract drilling company headquartered in Tulsa, Oklahoma, and engaged primarily in the drilling of oil and gas wells for exploration and production companies. The Company stands as one of the primary land and offshore platform drilling contractors in the world and is an industry leader in innovation.

Helmerich & Payne pays a generous dividend, currently yielding 4.16% the highest yield among its peer group, but the payout ratio is pretty high at 126.8%. The annual rate of dividend growth over the past three years was extremely high at 114.1%, over the past five years was also very high at 67.3%, and over the last ten years was at 32.5%.

Despite very low oil and gas prices that forced the company’s customers to reduce their drilling budgets, Helmerich & Payne, Inc. (NYSE:HP) has been able to generate positive free cash flow. The company has strong balance sheet, its quick ratio is very high at 3.30, and its debt to equity ratio is very low at 0.11.

According to the company, its strong liquidity position, along with its firm backlog of long-term contracts and reduced capital expenditures requirement, is expected to allow it to sustain its regular dividend dollar per share levels, and its intent is to continue with that plan. As such, in my view, the future quarterly dividend is sustainable. However, the company would not keep its high five years dividend growth rate while oil prices remain low.

Fifth Third Bancorp (NASDAQ:FITB)

Fifth Third Bancorp (NASDAQ:FITB) is a diversified financial services company headquartered in Cincinnati, Ohio. It operates through four segments: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors.

The company has strong capital ratios, and ratios remained strong during the recent quarter. The common equity Tier 1 ratio was 9.81 percent, the tangible common equity to tangible assets ratio was 8.55 percent and 8.97 percent. The Tier 1 risk-based capital ratio was 10.91 percent, the total risk-based capital ratio was 14.66 percent, and the Leverage ratio was 9.57 percent.

Fifth Third entered into or completed multiple share repurchases during the last quarter. In total, common shares outstanding decreased by approximately 15 million shares in the first quarter of 2016 from the fourth quarter of 2015.

Fifth Third Bancorp (NASDAQ:FITB) has been paying uninterrupted dividends since 1990. The annual dividend yield is at 2.84%, and the payout ratio is only 29%. The annual rate of dividend growth over the past three years was at 15.2%, and over the past five years was very high at 67%.

Since the company has strong capital ratios and the payout ratio is low, I believe that the future quarterly dividend is sustainable. However, as I see it, the company would not keep its high five years dividend growth rate of 67% but would rather increase its dividend by a lower rate of about 15%, as it has done during the last three years.

Cisco Systems, Inc. (NASDAQ:CSCO)

On February 10, along its second quarter fiscal 2016 earnings report, Cisco (CSCO) has also declared a quarterly dividend of $0.26 per common share, a 24% or five-cent increase over the previous quarter’s dividend. Cisco’s board of directors has also approved a $15 billion increase to the authorization of the stock repurchase program. Cisco’s board had previously authorized up to $97 billion in stock repurchases.

There is no fixed termination date for the repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $16.9 billion. In the report, Kelly Kramer, Cisco executive vice president and chief financial officer, said that Cisco Systems, Inc. (NASDAQ:CSCO) remains committed to its shareholders in delivering profitable growth and returning a minimum of 50 percent of its free cash flow back annually.

Cisco Systems, Inc. (NASDAQ:CSCO) has been paying uninterrupted dividends since 2011. The annual dividend yield is pretty high at 3.78%, and the payout ratio is only 41.3%. The annual rate of dividend growth over the past three years was high at 41.9%, and over the past five years was very high at 60.7%. Cisco is generating strong free cash flow; total cash flow from operating activities in the last quarter was at $3,922 million, and capital expenditures were only $314 million, what made the free cash flow an impressive $3,608 million. As such, and because the company is committed to returning a minimum of 50 percent of its free cash flow back annually, I believe that Cisco will continue to grow its dividend at about the same very high rate.