As a dividend growth investor, I'm most interested in companies that increase their dividends over an extended period of time. The longer those companies increase their dividends, the more likely those companies will continue to increase their dividends in the years ahead. It's these increasing dividends that will provide me with the wealth I desire. It's these continually increasing dividends that will increase the purchasing power of that income in the years ahead. And it's these growing dividends that will provide the financial freedom I seek and the independence necessary to live the self-directed life.
"It is better to have a permanent income than to be fascinating." |
The easiest way to find those companies that increase their dividends over an extended period of time is to check out the lists of Dividend Kings and Dividend Aristocrats. The companies on these lists have increased their dividends annually for at least 50 or 25 years, respectively. These are great places to start my research because they have the one characteristic that is so important to me -- increasing dividends. Unfortunately the idea of simply identifying companies based on their success at increasing their dividends is not always the best way to identify great investments due to inflation. In order for growing dividends to increase my purchasing power over time, the companies must increase their dividends at a rate greater than the current rate of inflation. Without that level of dividend growth, my income will soon deteriorate relative to the annual cost of living.
Other things to consider are the company's revenues and earnings. These are important to me when analyzing securities because consistent increases in revenues and earnings tell me that management is competent at managing the company. It also creates and expectation that management will continue to keep those revenues and earnings increasing well into the future. This is obviously important because all future dividends will be paid for out of the future revenues and earnings.
And the more revenues and earnings that are generated, the more money that's deposited into my account.
Other things to consider are the company's revenues and earnings. These are important to me when analyzing securities because consistent increases in revenues and earnings tell me that management is competent at managing the company. It also creates and expectation that management will continue to keep those revenues and earnings increasing well into the future. This is obviously important because all future dividends will be paid for out of the future revenues and earnings.
And the more revenues and earnings that are generated, the more money that's deposited into my account.
"Do you know the only thing that gives me pleasure? It's to see my dividends coming in." |
For the most part this sums up how I have researched and discovered the securities that I own. And for the most part this has been a very easy task to perform on a routine basis. There are currently only 53 Dividend Aristocrats and only 17 Dividend Kings to research. This research generally doesn't take very long and since the lists don't change very often, a weekly review of these securities can generally be done rather quickly.
At the end of each week, and in addition to the above, I like to review the daily dividend announcements that occurred over the previous 5 business days. While reviewing these, I especially take note of the dividends that have increased. That's because companies that increase their dividend will very quickly grab my attention. These organizations are the companies that may have the potential to become real winners.
I've performed this routine weekly for quite a few years, so on the 15th of February 2014 I began adding these dividend increases to this website in one of the "Investing" drop down menus (Dividend Increases). I added this section to this website so I can quickly find and review those increases from any laptop or mobile device I happen to be using at any given time.
At the end of each week, and in addition to the above, I like to review the daily dividend announcements that occurred over the previous 5 business days. While reviewing these, I especially take note of the dividends that have increased. That's because companies that increase their dividend will very quickly grab my attention. These organizations are the companies that may have the potential to become real winners.
I've performed this routine weekly for quite a few years, so on the 15th of February 2014 I began adding these dividend increases to this website in one of the "Investing" drop down menus (Dividend Increases). I added this section to this website so I can quickly find and review those increases from any laptop or mobile device I happen to be using at any given time.
What I've taken notice of the most when reviewing these dividend increases is that those companies that have increased their dividend greater than the rate of inflation plus have a forward dividend yield of 2.5% or greater are potential candidates for accumulation. These two things alone are a good indicator that these companies have the "right stuff". In addition, if these companies are not currently included in the list of Dividend Aristocrats or Dividend Kings, I may have just found a diamond in the rough. And those companies need further investigation. Companies like this may one day be included on one of those lists because long before companies got included on the list of Dividend Aristocrats, they had been increasing their dividends annually for as many as 24 years.
By reviewing the weekly lists of dividend increases I'm able to easily sort through the many companies that raise dividends each year. I could alternately go through the lists of Dividend Champions, Dividend Contenders, and Dividend Challengers but that would entail way too much time for me to reveiw on a weekly or monthly basis, especially when a majority of those companies will never meet my requirement for a 2.5% dividend and annual dividend increases greater than inflation.
So on the weekends, when I'm looking for new ideas and new companies to research, I spend at least some time reviewing the weekly dividend increases that have occurred. I've found, over the years, that this exercise can be a very interesting and financially beneficial activity to start looking for new buys.
Hopefully other investors can use this same information to find their own little investment gems. Good Luck and Good Trading.
By reviewing the weekly lists of dividend increases I'm able to easily sort through the many companies that raise dividends each year. I could alternately go through the lists of Dividend Champions, Dividend Contenders, and Dividend Challengers but that would entail way too much time for me to reveiw on a weekly or monthly basis, especially when a majority of those companies will never meet my requirement for a 2.5% dividend and annual dividend increases greater than inflation.
So on the weekends, when I'm looking for new ideas and new companies to research, I spend at least some time reviewing the weekly dividend increases that have occurred. I've found, over the years, that this exercise can be a very interesting and financially beneficial activity to start looking for new buys.
Hopefully other investors can use this same information to find their own little investment gems. Good Luck and Good Trading.
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