When considering the profile of companies which pay dividends, those that tend to have initially high yields (think +7 %), very few can be considered
true dividend growth companies.
Not exact matches
It's
true that, for example, if a
dividend - paying
company has 8 %
growth and a 3 % yield while another
company has 11 %
growth over the same period, the returns of the
companies will be comparable.
Hormel has the potential to generate 12 % long - term annual total returns (2 %
dividend yield + 10 % annual earnings
growth) if the future plays out as management expects, which would be a very solid return for such a quality
company and a
true dividend growth king.
And hopefully more
growth leads to more
dividends, though that's only
true if the
company can actually make good use of the incoming funds.
While
dividends and
dividend growth can be financed in many ways over the short run, they are a
true litmus of a
company's profitability over the long term.
Paying more and more Following a tried - and -
true strategy, Vanguard
Dividend Growth (VDIGX) invests in
companies that manager Donald Kilbride thinks are likely to raise their payouts regularly.
It's
true that, for example, if a
dividend - paying
company has 8 %
growth and a 3 % yield while another
company has 11 %
growth over the same period, the returns of the
companies will be comparable.