A Warning For Dividend Growth Investors

When it comes to stocks, I am primarily a dividend growth investor. I have been dating back over two decades, and I expect that I will continue to focus on high quality stocks at attractive valuations paying consistently growing dividends well into the future. I know well the virtues of dividend growth investing, and if you are a long-time dividend growth investor, so do you. But I've noticed something in recent years that has me increasingly concerned. Some dividend growth investors have come to exhibit notably high level of confidence. This troubles me, for when hubris begins to seep into any investment process, pain can often follow.
What To Worry About?
So what exactly does a dividend growth investor need to worry about? If you are an experienced dividend growth investor as I know many readers are, you have little to worry about, as you know your process well. You are fully aware of the downside risks that can occur over time and you are well prepared to navigate them. You know that the principal value of even your highest quality investments can fall by -20% to -40% or more during the worst of bear markets. But the key to success in dividend growth investing is to stay the course with your fundamentally sound company regardless of whatever is happening to the principal value of your investment at any given point in time.
But for the more inexperienced dividend growth investor, particularly those that did not endure the challenges of the financial crisis from 2007... Read more