For many companies, dividend growth comes in waves
with high dividend growth for a few years followed by lower dividend growth for a few years as the business cycle fluctuates.
The Dividend Blend consists of an investment with a high initial yield and another investment
with a high dividend growth rate.
What I've chosen to do is focus on a small core group of investments
with a high dividend growth rate to help add cash (USD) for future purchases while participating in the market overall affordably.
And now those higher - yielding stocks trade at about a 20 % premium to stocks
with high dividend growth.
However, I give «partial credit» to stocks between 1.5 % and 2.99 % because a moderate yield combined
with high dividend growth can be just as good (or better) than a high initial yield.
You can match a lower dividend loss rate in Investment type C
with a higher dividend growth rate in investment type Stock A even at a lower initial dividend yield.
Not exact matches
While retirees shouldn't abandon
dividend stocks, many investment experts are now looking for companies that provide a little
growth with that income, rather than just a
high yield.
To me, the process is simple: If you are contemplating the purchase of a company
with a
high internal
growth rate (which I define as expected
growth north of 10 % for the next ten year years), and it pays no
dividend or a negligible
dividend, then stuff the investment in a taxable account provided you have already gotten any possible matching from a company's retirement account.
All of the Bellwether strategies are guided by our Investment Committee which seeks to invest in
high quality, compelling companies that have strong balance sheets
with proven sustainable earnings and
dividend growth.
Bellwether only invests in
high quality, compelling opportunities
with companies that have strong balance sheets, proven sustainable earnings
growth and a track record of regularly increasing their
dividend or distribution.
Companies
with FCF well in excess of
dividend payments provide
higher quality
dividend growth opportunities because we know the firm generates the cash to support the current
dividend as well as a
higher dividend.
My
dividend strategy is a hybrid of
high yield and
dividend growth designed to deliver
high current income
with dividend growth at a portfolio yield of ~ 7 %.
The Wisdom Tree U.S.
Dividend Growth Fund (DGRW) is an equity investment with higher market risk that seeks to invest in dividend growth e
Dividend Growth Fund (DGRW) is an equity investment with higher market risk that seeks to invest in dividend growth equ
Growth Fund (DGRW) is an equity investment
with higher market risk that seeks to invest in
dividend growth e
dividend growth equ
growth equities.
The purpose of this screening process will be to identify companies that have a
high expected
dividend growth rate combined
with a starting yield that would produce greater returns.
However,
high yield hardly comes
with dividend growth and this is what I am seeking most.
In theory, you could sell at a
higher value and re-invest in a different stock
with a similar
dividend growth rate and
higher yield resulting in a larger annual return without ever investing any additional money.
If you wanted to avoid and / or minimize taxation, you could put a good life together by adding Berkshire, Becton Dickinson, IBM, etc. to your portfolio, and those companies either pay no
dividend or a low
dividend with a
high dividend and earnings
growth rate.
While you can find plenty of stocks
with higher yields, General Dynamics» double - digit
dividend growth rate implies that over time, investors could collect a much
higher yield on cost.
However,
with 38
high quality
dividend growth stocks in my portfolio my main concern remains a stable, predictable and growing
dividend pay - out.
The valuation is neither entirely unreasonable nor unusually appealing, but compared to the fairly
high valuation of the market currently, it may make a good choice for a stock
with a decent
dividend yield (3.43 %) and consistent
dividend growth history.
Clearly, combining
dividend reinvestment,
with high yielding stocks that offer a good rate of
dividend growth pays more than
dividends!
Management at
growth companies are able to use that earnings
growth to produce a
higher return for investors
with a return - on - equity of 17.8 % versus 16.4 % on average at
dividend - paying companies.
In buying stocks I try to maintain a balance between
high yielders (such as most REITS) and low yielders
with above average
dividend growth rates (stock like SBUX, DAL).
The current yield of 1.55 % might not be massive like AT&T's
dividend (which is why we diversify, and it's why I'm listing 10 different stocks
with different dynamics here), but Walt Disney more than makes up for that via strong
dividend growth: the five - year
dividend growth rate is 30.1 %, which is one of the
higher rates you'll run across.
The biggest challenge
with the
Dividend Aristocrats list is that each stock must be a member of the S&P 500 Index, cutting out many other high quality dividend growth
Dividend Aristocrats list is that each stock must be a member of the S&P 500 Index, cutting out many other
high quality
dividend growth
dividend growth stocks.
As such,
dividend growth in the next few years certainly won't match that last few, but I'm very content
with that given the exceedingly
high current yield, my
high confidence in Textainer to ride the storm through to better times, and ultra-safe P / E and reasonable payout ratio.
Since the industry is full of young,
high - priced start - ups, it doesn't tend to lend itself to
dividend payouts as these companies would rather invest in their own
growth than reward investors
with a
dividend.
As you can see many of the stocks mentioned may have
high current PE's but also feature long to very long
dividend histories
with relatively
high ten year annualized
dividend growth rates at around or better than 10 %.
In general, I think most long term
dividend growth investors follow a very similar methodology, though I suspect some first timers get lured by the
high yield stocks initially only to get burned down the road
with dividend cuts or eliminations.
Often
dividend growth companies
with high yields have slow
growth rates, and vice-versa.
If you're not familiar
with Loyal3 they are a commission - free broker
with a decent collection of stocks, including some
high quality
dividend growth stocks.
This predictive power is strong for speculative stocks
with highly subjective valuations (small - capitalization stocks, stocks without positive earnings,
growth stocks and stocks that pay no
dividend), because their prices tend to be most overvalued when sentiment is
high.
Based on BlackRock research, stocks
with a history of
dividend growth have tended to outperform in a rising rate environment and may hold up well relative to other segments of the stock market more susceptible to
higher rates.
Based on BlackRock research, stocks
with a history of
dividend growth have tended to outperform in a rising rate environment and may hold up well relative to other segments of the stock market more susceptible to
higher rates.
economic
growth and
higher returns on investments (especially after the Great Recession of 2008 - 2009) that generated
higher dividend and capital gain distributions,
with no associated tax withholding,
I have no concern about the declining
dividend growth rate, because it started from such a
high rate to begin
with.
The objective of the new ranking system is to capture stocks
with accelerating
dividend growth while still focusing on
high yield and low payout ratios.
With stocks near all - time
highs, I did not include
dividend growth investing in my best ideas for passive income in 2018.
He recommends shifting into
dividend growth stocks —
with moderate but rising
dividends — and out of stocks
with less
growth that pay
higher dividends.
The academic rebels, however, back up their
high dividend,
high earnings evidence
with the argument that companies that pay
high dividends are generally confident in their ability to provide strong earnings
growth in the future.
We also didn't want to miss out on the opportunity to invest in these companies at both a fair price and
with the potential for
high future
dividend growth.
His final selection is the ten
with the
highest projected
Dividend Growth Rates for the next 3 - 5 years.
• Trimmed JNJ and PEP each back to 9 % of the portfolio to get them under the 10 % - max guideline •
With the proceeds, added to existing positions in AT&T (T) and Microsoft (MSFT) •
With the remaining proceeds, started a new position in Digital Realty Trust (DLR) Thus, this package of trades served several strategic goals at the same time: • It corrected the over-sized positions by getting them back under 10 % of the portfolio • It allowed me to increase my stakes in two
high - quality
dividend growth companies • It allowed me to add a new position, bringing me closer to my target of 20 - 25 stocks overall.
You also have to be wary of companies
with high current yields because the market may be discounting slower
dividend growth or worse, a potential
dividend cut.
High - Yielders
with Capital Appreciation Potential: Above - average
dividend yields and potential
growth
Therefore, I ease the grading on
dividend growth characteristics, because you are starting out
with such a
high yield.
In either case, it is best to reinvest proceeds into fairly valued or undervalued
high quality
dividend growth stocks that will reward you
with rising
dividend payments on a regular basis.
The 1.3 % current yield might not be exceptionally
high, but whatever the stock lacks in yield it more than compensates
with dividend growth.
I wish the starting yield was a bit
higher but
dividend growth and total return should be solid
with SYK.
If you can buy a
dividend growth company at a better price, you are rewarded
with a
higher yield.