High Starting Yield vs Dividend Growth: 8 Years of Income

Introduction

Is it better to start with a high dividend yield or choose companies that grow their dividends faster? This visualization compares eight dividend-paying stocks from 2018 through 2025: Altria (MO), Verizon (VZ), Realty Income (O), Exxon Mobil (XOM), Microsoft (MSFT), Visa (V), Mastercard (MA), and Lowe's (LOW). The comparison highlights how starting yields, dividend growth rates, and annual income evolve differently over time. Some companies provide larger payments immediately, while others gradually close the income gap through faster dividend growth.

Key insights

• Dividend Income Grew Across the Group

  The combined annual dividends per share increased from $16.47 in 2018 to $27.64 in 2025, representing a 7.67% annualized growth rate. All eight companies increased their annual dividends between the first and final years, although their growth rates varied considerably.

• Lowe's Nearly Caught Verizon Despite a Much Lower Starting Yield

  Verizon began with a 4.5% dividend yield but delivered just 1.99% annualized dividend growth. Its yield on cost reached 5.1% by 2025. Lowe's started with a much lower 1.8% yield but achieved 14.88% annualized dividend growth, reaching the same 5.1% yield on cost by 2025. Lowe's also delivered the largest absolute dividend per share in 2025 at $4.70, compared with Verizon's $2.72. This illustrates how faster dividend growth can substantially narrow an initial income disadvantage.

• Mastercard and Visa Led Dividend Growth

  Mastercard recorded the fastest dividend growth at 17.21% annually, followed by Visa at 15.68%. Both started with yields of approximately 0.7%, but their dividends per share increased significantly by 2025. Mastercard's annual dividend rose from $1.00 to $3.04, while Visa's increased from $0.88 to $2.44. Despite this growth, their ending yields on cost remained below those of several higher-yielding companies.

• Higher Starting Yields Still Provided an Income Advantage

  Altria, Realty Income, and Exxon Mobil began with yields between 3.7% and 4.5%. By 2025, their yields on cost reached 5.8%, 5.6%, and 4.8%, respectively. Their dividend growth rates were more modest than those of Microsoft, Visa, Mastercard, and Lowe's, but their higher initial payouts provided meaningful income from the beginning. The comparison demonstrates why starting yield and dividend growth should be evaluated together rather than independently.

Methodology

The visualization tracks annual regular cash dividends from 2018 through 2025 for eight selected companies. The chart uses a normalized investment of $10,000 per stock, based on historical starting prices from December 29, 2017, for a hypothetical total investment of $80,000. Annual income is calculated using fixed share counts, without dividend reinvestment or additional contributions. The accompanying dividend-per-share summary provides an additional view of the underlying distributions. Its combined totals represent one share of each company, not the dollar income of the equally funded portfolio. Initial yield uses the forward annualized regular dividend rate in effect on the starting date divided by the historical starting price. Ending yield on cost uses the 2025 annual dividend divided by that same price. Dividend CAGR measures annualized growth between the 2018 and 2025 calendar-year dividends. The starting prices represent a standardized historical cost basis, not actual investor purchases. Initial yield and yield on cost are not current market yields. Realty Income's 2021 Orion spin-off is excluded. The analysis measures dividend income only. Share-price appreciation, taxes, and inflation are excluded. The company selection is a fixed snapshot dated October 16, 2026.

Related links

• Blog article
• YouTube video