Dividends are small but mighty wealth creators. That’s abundantly clear in the data. Over the past 50 years, the average dividend-paying stock in the S&P 500 has delivered a 9.2% average annualized total return, according to data from Ned Davis Research and Hartford Funds. That has outperformed an equal-weighted S&P 500 index’s 7.7% average annual total return.

However, the secret to dividend stocks lies in their growth. Dividend growers and initiators delivered a 10.2% average annual return, significantly outpacing companies with no change in their dividend policy, with an average of 6.7%.

Some companies stand out for their ability to grow their dividend. Marsh & McLennan (MMC 0.35%), Mastercard (MA 0.33%), and Equity LifeStyle Properties (ELS -0.40%) have delivered 10% compound annual dividend growth over the past decade. Here’s why a few Fool.com contributors believe investors should take a closer look at these top-notch dividend stocks.

A behind-the-scenes insurance broker putting up incredible returns

Tyler Crowe (Marsh & McLennan): Don’t be surprised if this is the first time you’ve heard of Marsh & McLennan. Unless you work in a business’s risk management or finance divisions, you may never have encountered this business. Marsh & McLennan’s primary business is business risk management. It’s a business insurance broker, a healthcare and retirement benefit plan manager, a reinsurance broker, and a consultancy firm rolled into one. It even has an “outsourced chief investment officer” segment to handle defined benefit pension funds for clients.

Insurance for businesses isn’t nearly as cookie-cutter as automotive or homeowners insurance. Because of the complexity of underwriting business risk insurance, companies will go through brokers like Marsh & McLennan to advise them on what kind of insurance they need and to bid it out to various underwriters. Marsh & McLennan takes no underwriting risk as it typically gets fees and commissions for the sale of an insurance contract. In 2023, it brokered $160 billion in premiums across its various insurance subsidiaries.

Marsh & McLennan has delivered incredible results for its investors. Since 2010, the company has grown its adjusted earnings per share and its free cash flow by 13% and 18%, respectively, on an annualized basis. It has also grown its dividend by 11% annualized over that time. Strong EPS, free cash flow, and dividend growth have all led its stock to nearly double the returns of the S&P 500.

MMC Dividend data by YCharts

Risk management is critical for every business, giving Marsh & McLennan a long runway for growth and returns. It’s not hard to envision the company continuing its “10% for 10” streak for another decade.

A master of moving (and making) money

Jason Hall (Mastercard): One look at its 0.5% yield might be enough to keep many dividend investors from considering Mastercard. But unless it’s high-yield income you’re looking for, I think that’s a mistake, because very few companies have been able to deliver the incredible total returns that this credit and debit card network giant has been able to deliver.

Over the past decade, Mastercard has earned its shareholders 480% in total returns, with dividends accounting for about 35% of those gains. That’s because, despite that low yield — it’s never been as high as 1% — the company has been able to supercharge its dividend growth rate for many years.

Since 2014, Mastercard has increased its dividend an incredible 500%. And while it may not be growing it at the same high rate that it has in the past, the payout still gets boosted a lot. When it was increased for 2024, the $0.66 per share quarterly dividend is almost 16% higher than last year’s.

That’s because Mastercard continues to grow its revenues and profits at an impressive rate. Revenue was up 10% in the first quarter, while earnings per share rocketed up 30% higher. And considering that it earned $3.22 per share while only paying out $0.66 in dividends, the payout is very secure, while there’s also a huge amount of room for the company to keep growing the dividend at a high rate for many years to come.

Don’t disregard low-yield stocks like Mastercard; they sometimes are secret dividend growth stocks that can help investors build a lot of total wealth.

Going off the beaten path has paid big dividends

Matt DiLallo (Equity LifeStyle Properties): Equity LifeStyle Properties is a dividend growth juggernaut. The real estate investment trust (REIT) has delivered 13.6% compound annual dividend growth over the last decade. It has obliterated the REIT sector’s average of 5.5%. That has helped drive a nearly 280% total return for its investors over the past 10 years.

The secret to Equity LifeStyle‘s success lies in its strategy. It focuses on owning and operating manufactured home communities, RV resorts, campgrounds, and marinas. By focusing on properties off the beaten path, it has faced less competition for acquisitions, enabling it to purchase properties at higher initial investment yields.

The REIT has also focused on properties with strong underlying growth fundamentals. Moving a mobile home is expensive, which has kept occupancy levels high, allowing the REIT to continue increasing rent even during recessions. Since 1998, Equity LifeStyle has grown its same-store net operating income at a 4.4% annual rate. That’s above the 3.3% average of the REIT sector and of durable multifamily properties.

Steady, above-average underlying income growth in its existing portfolio has combined with highly accretive acquisitions to drive robust growth in its funds from operations (FFO). It has grown its normalized FFO per share by around a 9% compound annual rate since 2006. That’s more than double the REIT sector average.

Equity LifeStyle is in a strong position to continue growing briskly. It’s benefiting from multiple tailwinds, including favorable demographics, housing affordability issues, and a growing preference for outdoor experiences. Meanwhile, it has a strong financial profile, giving it the flexibility to reinvest in existing communities and acquire new ones. These factors position this REIT to continue growing value for its shareholders in the future.