Beat the Treasury With These 5 Dividend-Growth Stocks

NEW YORK (TheStreet) -- The hunt for yield is stronger than ever. But now it's harder to find.

There are plenty of stocks that pay dividend yields in excess what the U.S. Treasury is offering. It's not difficult to outpace a yield of just over 1.5%, after all. That's where the 10-year Treasury bond is, thanks to its status as a safe haven for investors around the world.

Many Americans, concerned more about preserving capital than making a return on their money in this volatile environment, often forget to take into account how inflation affects their investment. Because inflation is 1.7%, they're actually losing money on the 10-year bond.

In 2011, the dividend yield for the entire S&P 500 stood at 2.1%, which rivals the yield of the 10-year U.S. Treasury, but still remains below the long-term average of 4.5%.

That's one reason higher-yielding, dividend-paying stocks have been a top choice by investors looking for decent return and steady stream of income over the past few years. And now those higher-yielding stocks trade at about a 20% premium to stocks with high dividend growth.

A lot of professional investors are turning to dividend-growth stocks over high-yielding stocks, and not just for the relatively cheaper valuations. Only high-quality and healthy companies can afford to grow their dividends steadily. With cash on corporate balances sheets at high levels and dividend-payout ratios at their lowest levels since the start of the 20th century, there's good reason these types of companies make a good investment.

On average since 1900, the S&P 500 dividend-payout ratio averaged 54%, according to Bank of America's(BAC) Merrill Lynch. Today, that ratio is closer to 25%. Clearly, corporations have room to raise their payout ratios.