5 stocks that paid dividends for 20 yrs and beat the market

When markets plunge and headlines scream panic, most investors feel their stomachs churn. Watching your portfolio sink is scary. But imagine having an investment strategy where your income keeps rising even during a crash . Instead of fear, you feel peace of mind knowing you're still getting paid - and even more with each passing year. This isn't a fantasy; it's exactly what dividend growth investing can do for you. It's a way to profit from panic by earning a growing income even when markets fall .

The high-yield trap: Why chasing big yields backfires

Many investors assume that high dividend yields mean steady income. But in reality, high yields often signal a problem. In India, many high-yielding stocks belong to slow-growing or declining businesses. Their payouts may look attractive, but they're usually unsustainable.

Here's the catch: a falling stock price inflates the yield. That doesn't make it a bargain—it usually means the market has lost faith in the company's growth. These "dividend traps" can cut or stop payouts when profits dip, leaving investors with neither income nor capital gains.

Instead of chasing the biggest yield, look for companies that consistently grow their earnings and dividends. That's where true income stability—and long-term wealth—comes from.

Dividend Growth: The smarter path to rising income

If high yield isn't the answer, what is?

It's dividend growth—investing in companies that consistently increase their dividends year after year. These are strong, growing businesses that share rising profits with shareholders.

Unlike high-yield traps, dividend growers offer two powerful benefits: rising income and capital appreciation. Thanks to expanding earnings, their dividends grow over time, and so does the stock price. Even if the initial yield is modest, it often surpasses static high-yielders within a few years.

Let's say you invest in a stock with a 2 per cent yield that doubles its dividend every five years. In 10 years, your yield on original investment becomes 8 per cent, and you likely enjoy capital gains, too.

Emotionally, it helps during downturns. In a crash, a rising dividend offers peace of mind. You're still getting paid. Many investors hold on—not out of hope, but because the income keeps coming in.

Wealth creation that feels steady, reassuring, and smart is the magic of dividend growth investing.

Proof in the numbers: 5 dividend growers vs the Sensex

These ideas aren't just theory - look at some real Indian examples . Consider five well-established Indian companies: Persistent Systems , HDFC Bank , Pidilite Industries , Asian Paints , and CRISIL . All five have paid dividends yearly for the last 20 years , and in 90 per cent of those years they hiked the dividend . That means that shareholders get a raise in their annual income almost yearly. These are the kind of dividend growth champions we're talking about - strong businesses that reward investors consistently.

Now, how did they perform for investors? The results are eye-opening. Over the past 10 years, a portfolio equally split across these five stocks delivered around 18.9 per cent CAGR (annual growth) - turning a Rs 1 lakh investment into roughly Rs 5.25 lakh. In contrast, the BSE Sensex returned about 10.1 per cent CAGR in the same period - Rs 1 lakh would grow to about ₹2.42 lakh. In absolute terms, that's 425 per cent total return vs 242 per cent for the Sensex. In other words, our dividend growers portfolio generated nearly double the wealth compared to the market index over a decade.

And it wasn't just about higher returns, it was also about a smoother ride . During the COVID crash of March 2020, the Sensex plunged about 25 per cent in weeks, a gut-wrenching fall for any investor. But this five-stock dividend portfolio dropped only around 16.9 per cent in that panic. While everyone else was reeling, holders of these quality dividend growers saw shallower declines and kept collecting dividends through the turmoil. Lesser drawdowns meant recovering faster, and indeed, when the market rebounded, these stocks zoomed back up, hitting new highs and continuing to raise their payouts.

The chart above illustrates the point: choosing solid dividend growth stocks can give you higher returns in the long run and protect you better in a crash . As investors, we believe this blend of upside and safety is the best of both worlds. Rationally, you're building more wealth with higher compounded returns and smaller losses in downturns. Emotionally, you gain confidence - instead of dreading market volatility, you know you're still earning income and that your stocks have proven their mettle in stormy weather. It's rising income with peace of mind .

How to start your dividend growth journey

By now, the benefits of dividend growth investing are clear: rising income, stronger returns, and lower stress . So how can you implement this strategy in your portfolio? The key is finding businesses with the right traits : a long track record of dividend payments, the ability and willingness to increase those dividends consistently, and solid financials to back it up (healthy profits, manageable debt, and durable competitive advantages). In practice, you'd look for companies with robust free cash flow, prudent payout ratios (so they retain enough to grow), and a history of weathering economic cycles while still rewarding shareholders.

However, finding such dividend gems is easier said than done. Only a select few of thousands of stocks check all these boxes. It takes deep research to sift through financial statements, understand business models, and identify which companies are likely to keep growing and hiking payouts year after year. Simply picking a stock with a high current yield won't do; you need those quality compounders that balance dividends with growth. For many investors, doing this homework independently can be time-consuming and overwhelming.

This is where Value Research Stock Advisor's Dividend Growth Portfolio comes in. Our team has already done the heavy lifting for you by carefully curating a portfolio of India's best dividend growth stocks. The Dividend Growth Portfolio is a ready-made selection of companies like the ones we discussed - firms with strong track records and bright futures, poised to keep raising dividends. It's designed to take the guesswork out of dividend investing and help you start earning a rising income stream without years of trial and error.

In the Dividend Growth Portfolio, you'll find businesses that give you the confidence of dependable dividends and the excitement of growth potential. Instead of worrying whether a high yield is a trap, you can invest knowing these companies have been vetted for sustainability. It's a straightforward way to implement the dividend growth strategy: you essentially get a blueprint of what to buy and hold for the long run.

Conclusion: Build wealth and income - Even in bad times

Market panics will come and go, but you can face the future without fear when you own companies that grow their dividends . You'll earn rising income even when markets fall , turning volatility into an ally rather than an enemy. The evidence is clear that this approach works - delivering wealth and peace of mind to those who stay the course.

Ready to profit from panic instead of being paralysed by it? It's time to put dividend growth investing into action. Value Research Stock Advisor's Dividend Growth Portfolio gives you a head start with a hand-picked list of dividend-growing stocks to kick off your journey. Don't let market volatility bully you - instead, build a portfolio that pays you more each year and thrives through the storm. Explore the Dividend Growth Portfolio today and build your rising income stream for a financially secure tomorrow.

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