It's Dividend Growth, Not Yield that Matters Now: 5 Dividend Growers

In a report Thursday highlighting ways to position for rising interest rates, one important topic highlighted by Bank of America Merrill Lynch strategists applies to dividend investors ---go for dividend growth not high yield.

U.S. Equity & Quant Strategist Savita Subramanian notes that dividend growth stocks are trading at the biggest discount to dividend yield stocks in at least 20 years. Moreover, high dividend stocks are usually lower quality, and relatively more vulnerable to a rise in yields.

Whiplash in high yield dividend names can already been be seen in the MLPs. MLP ETF ALPS Alerian MLP (NYSE: AMLP) is down 2% over the last month.

Sticking with the ETF theme, ETFs that focus on dividend growth opportunities include: WisdomTree U.S. Dividend Growth (NASDAQ: DGRW) and Vanguard Dividend Appreciation ETF (NYSE: VIG).

Looking at individual big cap stocks that are raising dividend, look no further than:

Macy's (NYSE: M) dividend raised 100% last and another 25% this year. Current yield is 2.1%

Wells Fargo (NYSE: WFC) dividend raised 83% last year and another 20% this year. Current yield is 3.1%

Cisco (NASDAQ: CSCO) dividend raised 133% last year and another 21% this year. Current yield is 2.8%

Quest Diagnostics (NYSE: DGX) dividend raised 70% last year and another 76.5% this year. Current yield is 1.9%

Ford (NYSE: F) raised dividend 100% this year. Current yield is 3%.

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