3 Dividend Stocks That Give You a Raise Each Quarter

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Not many companies increase their dividends every year. But those that do tend to outperform their static peers. In fact, since 1972, consistent dividend growers have delivered an average total annual return of 9.89% versus just 7.37% from companies with no change in their payout rate, according to a study by Ned Davis Research.

Some companies, however, take things a step farther and give their investors a raise each quarter. Three with a long history of boosting their payout on a quarterly basis are Antero Midstream Partners LP (NYSE: AM), Andeavor Logistics LP (NYSE: ANDX), and Holly Energy Partners, L.P. (NYSE: HEP). It's a streak that all three expect will continue in the coming year.

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12 down and many more to go

This past January, Antero Midstream Partners announced its 12th consecutive quarterly distribution increase since going public in November 2014. It was a generous raise, too: 7% higher than the previous quarter and 30% above the prior-year level. With that increase, units of the natural gas gathering master limited partnership (MLP) now yield an attractive 5.8%.

Antero Midstream Partners still has plenty of distribution growth ahead of it. The company announced earlier this year that it expects to increase its payout 28% to 30% each year through 2020 and sees it expanding another 20% in 2021 and 2022. Even better, Antero Midstream expects to deliver this growing income stream while maintaining strong financial metrics, including covering its payout with cash flow by 1.25 times through 2020 and keeping its debt at a comfortable 3 times EBITDA or less.

Staying under-the-radar

Andeavor Logistics also announced another distribution increase this January, raising its payout by 1.5% from the previous quarter and 10% above the prior-year rate. That marked the 27th straight quarter that Andeavor Logistics increased its payout, which is an incredible performance for such an underfollowed dividend stock. With its latest raise, this MLP yields an attractive 8.9%.

The pipeline company is aiming to increase its payout by more than 6% this year. It expects to be able to cover that rising payout with cash flow by 1.1 times while keeping its leverage ratio around 4 (both are average levels for the sector). Meanwhile, Andeavor Logistics has many expansion opportunities ahead of it, which position the company to potentially continue steadily increasing its payout at a mid-single-digit pace through at least 2020.

One remarkable dividend stock

Holly Energy Partners has the most impressive dividend history of this trio. It announced its 53rd consecutive quarterly distribution increase this January -- and has now given investors a raise every single quarter since it went public in July 2004. With that most recent raise, which was 7% above the prior year's level, the company's yield is now up to 9.4%.

Holly Energy Partners fully expects to keep that streak alive, though at a slower pace. It projects that the distribution would rise only about 4% this year. What's more concerning is that the company expects its payout coverage ratio to be a tight 1 in 2018. However, it anticipates that coverage would rise in the second half as rate increases go into effect across its systems. Furthermore, it recently secured $110 million in capital to fund some expansion projects and enhance its ability to pursue additional growth opportunities. While distribution growth beyond 2018 is less certain right now, one well-executed acquisition could set Holly Energy up to keep growing cash flow and its distribution for the next few years.

Income growth at its finest

Annual dividend raises are great, but this trio has given their investors one every single quarter for the past few years. Those streaks appear poised to continue given their current forecasts, making them appealing options for income-seeking investors.

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Matthew DiLallo has the following options: short June 2018 $25 puts on Antero Midstream Partners. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.