Top 5 Dividend Growth Stocks For 2018

&l;p&g;&l;img class=&q;dam-image ap wp-image-6 size-large&q; src=&q;×0.jpg?fit=scale&q; alt=&q;Mastercard-Stock-NYSE&q; data-height=&q;640&q; data-width=&q;960&q;&g; (AP Photo/Richard Drew)

The first few months of the New Year typically involve both taking inventory of the last year&a;rsquo;s events and looking ahead to the future. It&a;rsquo;s essential for investors to evaluate portfolio performance and consider crafting new portfolio strategies to meet and maintain their financial New Year&a;rsquo;s resolutions.

Reality Shares&a;rsquo; research finds that stocks with consistent dividend growth have &l;a href=&q;; target=&q;_blank&q;&g;historically outperformed&l;/a&g; stocks with dividend cuts or low rates of dividend growth. To that end, &l;a href=&q;; target=&q;_blank&q;&g;DIVCON&a;reg;&l;/a&g;, our very own dividend-health rating methodology, evaluates dividend-paying stocks in the S&a;amp;P 500 and ranks their dividend growth potential for the next 12 months.

Here are our top 5 stock picks for 2018 that can potentially outperform based on their superior dividend growth potential.

&l;strong&g;1. Mastercard&l;/strong&g;

Symbol: MA (NYSE)

Sector: Finance (credit cards, transaction services)

DIVCON Rating: 5 out of 5

Mastercard is the first stock on our list for 2018. With a DIVCON 5 out of 5 rating, our forward-looking methodology concludes the cardmaker and transaction servicing company has strong dividend growth potential in 2018. The stock has been rated DIVCON 5 since 2016 and rallied nearly 50% in 2017 alone. Even after 2017&a;rsquo;s strong performance, the stock continues to maintain the high likelihood for dividend growth, possessing one of the highest DIVCON scores of S&a;amp;P 500 dividend payers.

Mastercard has made double digit dividend increases every year since 2011. On the earnings front, the stock has a 5-year annualized revenue growth of 10%, and earnings per share (GAAP) share growth of over 20% for the same time frame. Our methodology also measures cash flow, as cash flow metrics are strong determinants of dividend growth. Mastercard&a;rsquo;s cash flow has recorded years of consecutive growth, specifically reaching annualized 5-year cash flow growth of 16%. DIVCON shows that Mastercard&a;rsquo;s dividend growth potential is still at an upward trajectory and has the probability to continue its dividend and price growth.

&l;strong&g;2. Thor Industries&l;/strong&g;

Symbol: THO (NYSE)

Sector: Consumer Discretionary

DIVCON Rating: 5 out of 5

Thor Industries is next on our 2018 stock list. It&a;rsquo;s likely a stock you&a;rsquo;ve never heard of, but it&a;rsquo;s ranked among the top S&a;amp;P 500 dividend payers in 2018 according to DIVCON. Though the stock has nothing to do with the superhero of the same name, the American RV company is a marvel of dividend growth potential, with a DIVCON 5 out of 5 score. The stock has held a DIVCON 5 rating since 2016, and has returned over 50% this year.

The stock&a;rsquo;s dividend growth potential is also reflected in its fundamentals. Between 2016 and 2017 alone, Thor Industries&a;rsquo; earnings per share grew 44% to $7.09, with an annualized 5-year earnings growth rate of 28%. These rates of earnings growth also occurred alongside growing strong revenue and cash flow growth, reaching 5-year annualized measures of 22% and 28%, respectively.

&l;strong&g;3. Texas Instruments, Inc.&l;/strong&g;

Symbol: TXN (NASDAQ)

Sector: Technology (semiconductor)

DIVCON Rating: 5 out of 5

If you follow Reality Shares&a;rsquo; research, you&a;rsquo;ve likely seen that Texas Instruments has been a highly rated DIVCON stock for some time, and for good reason. While the technology provider grew its dividend 24%, it also rallied over 40% for an excellent total return in 2017. After running its analysis for 2018, DIVCON&a;rsquo;s ruled-based approach forecasts the stock to have another strong showing in dividend growth for investors.

The semiconductor company kicks off 2018 with growing dividends, earnings-per-share and cash flow behind it. The stock has earnings-per-share growth of 13%, 22% and 34% in its 5 year, 3-year and 1-year time frames, respectively. Lastly, the company continues to record growing cash flow, with a 5-year annualized cash flow growth rate of 7%. The stock has grown its dividend every year since 2007, with an average dividend increase of 21% since 2009. DIVCON&a;rsquo;s analysis determines the producer of the TI-series calculator will continue its trend of dividend increases for investors.

&l;strong&g;4. Nvidia Corp.&l;/strong&g;


Sector: Technology (Microchip)

DIVCON Rating: 5 out of 5

As the top stock of 2016, and with stellar performance in 2017, Nvidia has been a popular stock for some time now. Though the stock has recorded nearly a 500% rally since 2016, DIVCON&a;rsquo;s methodology still ranks Nvidia as a DIVCON 5 stock, with strong dividend growth potential within the next 12 months. The recent stock price rally wasn&a;rsquo;t the result of hype, but strong fundamentals. The stock&a;rsquo;s cash flow and earnings per share grew 100% over the last year, with a 5-year annualized growth rate of 18% and 22%, respectively.

Nvidia has increased its dividend every year since 2012, averaging a double digit increase each time. Keep in mind that though Nvidia has been very popular for the past few years, DIVCON&a;rsquo;s methodology is completely rules-based, and does not take a recent rally into consideration. The stock still shows strong dividend growth potential.

&l;strong&g;5. Evercore Inc.&l;/strong&g;

Symbol: EVR (NYSE)

Sector: Finance (Investment Banking)

DIVCON Rating: 5 out of 5

The global independent investment bank Evercore is also on our list of top 5 dividend stocks for 2018. With consecutive annual dividend increases since 2009, Evercore continues to retain strong dividend growth potential according to our methodology. The finance company has also shown a trend of increasing revenue, with 5-year annualized revenue growth of 21.8%. From 2015 to 2016, the stock also experienced a 96% increase in cash flow, with an overall 40% annualized 5-year growth rate. DIVCON&a;rsquo;s dividend-health analysis places Evercore in the top 5 list of the best stocks of 2018.

&l;strong&g;Keep Dividend Growth in Mind for 2018 and Beyond&l;/strong&g;

While stocks with high dividend payouts or high dividend yields can be attractive, our research finds that stocks with higher rates of dividend growth often outperform. Investors seeking primarily yield can expose themselves to unnecessary risk, especially in volatile market environments. We believe that dividend growth can be a better measure of quality than dividend yield alone, and with dividend growth tools like DIVCON, investors may have the opportunity to outperform in 2018.&l;/p&g;