While the past is not necessarily an accurate guide to the future, it can be highly useful to look at a company's track record.
That's especially the case when it comes to dividends, since a company with an excellent history of increasing dividends per share may be more likely to try and maintain such a record moving forward. It also indicates that the company is in decent financial shape and may offer more stability compared to many of its index peers.
So, with that in mind, here are three stocks with superb recent histories of increasing dividends.
Commonwealth Bank of Australia
Over the last five years, Commonwealth Bank of Australia (ASX: CBA) has increased dividends per share at an annualised rate of 12%. That's a stunning rate of growth and means that the amount that shareholders receive as a payout from the bank has risen by a total of 76% in just five years.
While the outlook for big banks is rather mixed, with Credit Suisse the latest to caution regarding their future prospects, CBA is still expected to increase dividends per share by 5.2% this year. That's more than twice the current interest rate and means that it could be yielding as much as 5.1%.
With interest rates potentially being cut in 2015, it could mean that investor sentiment in top dividend-paying stocks increases, which could push CBA's share price higher.
National Australia Bank Ltd.
Over the last five years, total returns for shareholders of National Australia Bank Ltd. (ASX: NAB) have been a hugely impressive 11.9% per annum. Part of the reason for this is the level of dividends that the bank pays, with it having increased dividends per share at an annualised rate of 6.3% during the period.
This brisk rate of growth means that NAB now yields a highly enticing 6.1% and, as a result, it would be of little surprise for investor demand to increase during a period of prolonged low interest rates.
And, while NAB trades at a premium to the wider banking sector in terms of it having a price to book ratio of 1.77 (versus 1.27 for the sector), it seems to be worth the premium and could see its share price move higher this year.
Transurban Group
The final quarter of 2014 was a strong one for Transurban Group (ASX: TCL), with the toll road and tunnel operator recording a rise in revenue of 37%. This was aided by the $7 billion acquisition of Queensland Motorways as well as healthy traffic flows that have undoubtedly been aided to a degree by lower oil prices.
In fact, it's been a relatively strong recent period for the company and this has allowed it to increase dividends per share at an annualised rate of 10.1% during the last five years. This has helped to push its share price higher, although it still yields a rather attractive 4.2%
As well as this excellent track record of growth, Transurban also offers relative stability due to the nature of its business and, with the general attitude among investors being one of caution at present, it could become an even more in-demand income play this year.
