Value Investing News

Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don't have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system.

When stock prices start dropping, our primal instinct of flight kicks in and we want to sell. In many cases that is the time to be buying. As a long-term buy-and-hold investor, most of my evaluation efforts are aimed at determining when to buy a stock. However, sometimes selling a stock is the right thing to do, and we need to be adept at identifying those times.

Not all stock in the S&P 500 Index pay dividends, but many of the best known dividend growth stocks are part of the index. This week week, I screened my dividend growth stocks database for stocks that are members of the S&P 500 and have a yield of 5% or more. The results are presented below:

In 2009, I introduced the Stock Ideas list and it has proven to be immensely popular. The list consists of Dividend Aristocrats, US Broad Dividend Achievers and U.S. Dividend Champions. Duplications in the above lists are eliminated and stocks are crossed out when I learn that they have either cut their dividend or fail to raise it.

The latest 10-K filing by INTEGRYS ENERGY GROUP, INC.

The S&P 500 Dividend Aristocrats is the most prestigious list of dividend stocks. The Dividend Aristocrats index is designed to measure the performance of S&P 500 constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. This index is a member of the S&P Dividend Aristocrats index series.

Dividend sustainability is paramount for the high-yield investor. Having a stock cut its dividend could potentially crush their income. A high-yield investor is less concerned about dividend growth than maintaining the current high-yield.

As a long-term buy-and-hold investor, most of my evaluation efforts are aimed at determining when to buy a stock. Sometimes it is necessary to sell a stock and we need to be equally adept at identifying those times.

As I have stated many times, my goal is to create an ever growing income stream from dividend stocks. Secondarily, it is my desire to beat the S&P 500 over time. With that said, I rarely look at the capital performance of individual stocks. However, I recently sorted my portfolio by Total Gain % (total gain/basis) and was mildly surprised at the top performers.

This is the first installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. This week we are looking at Utilities – those investments long considered as a safe harbor for “orphans and widows.”

I was amazed to find several companies on the champions list, which have raised distributions for over 50 consecutive years. The companies include:

I am a firm believer that asset allocation plays a significant part in a portfolio’s long-term results. Recently, I received a question asking if you could have a diversified portfolio of dividend stocks. It is an interesting question that deserves further examination.

The dividend aristocrats list includes companies which have increased dividends for over 25 years in a row. It is equally weighted and re-balanced once an year. Over the past 3,5 and 7 years the index of elite dividend stocks has managed to outperform the S&P 500 by 5%, 3.7% and 4.40% respectively.